Intermediaries can reduce positive income (maturity) gaps byinterest sensitive and by_the proportions of their liabilities that arethe proportion of their assets that are interest sensitive.Select one:O a increasing; decreasingO b. decreasing: increasingO c. decreasing decreasingO d. increasing; increasing

The assets whose market price is vulnerable to the interest rate changes are called…

Answered: Intermediaries can reduce positive…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The investment income generated between the time premiums are received and the time claims are paid may result in underwriting risk due to? a. Unexpected decreases in investment yields or returns. b. Unexpected increases in investment yields or returns. c. Unexpected increases in expenses. d. Unexpected decreases in expenses.
Why is the acid test ratio a more rigorous test of short-term solvency than the current ratio? A. The quick ratio eliminates prepaid expenses for the denominator.B. The quick ratio eliminates prepaid expenses for the numerator.C. The quick ratio eliminates inventories from the numerator.D. The quick ratio considers only cash and marketable investments as current assets.E. The quick ratio eliminates revenue from the numerator.
The static GAP focuses on monitoring net interest income in the long term. Select one: True False
If the duration gap is zero, then the market value of equity is ____________ interest rates.A. increased due to an increaseB. increased due to a decreaseC. decreased due to an increaseD. immunized from changes
___________ is the possible loss of revenue resulting mainly from a decline in the revenue base. Group of answer choices Investment risk Debt-related risk Revenue risk Insurance risk
Following IFRS, which statement is false? Group of answer choices The revaluation surplus account is a specific account reported as an unrealized gain in the statement of comprehensive income. If a long-term operating asset's fair value decreases in subsequent accounting periods, after an earlier write-up, the firm reduces the revaluation surplus if it exists. If the revaluation initially increases the long-term operating asset's carrying value, the firm records the difference between the carrying value and the fair value (the unrealized gain) in the revaluation surplus account. The revaluation surplus account is a specific account reported in other comprehensive income (OCI) in the statement of comprehensive income.
Which one of the following is an indicator that an investment is acceptable? Check all that apply: Profitability index equal 1.5 Profitability index greater than 0 the required return less than internal rate of return IRR equal to zero Payback period exceeds the required period Profitability index equal 1
What have been the possible reasons for the changes in Return of Equity (ROEs )? •Decompose the ROE into the main components: ROA and EM (Equity Multiplier) •Analyse the sources of Return of Asset (ROA) : Asset Utilisation (AU) and Profit Margin ratios.(PM) •Identify the sources of the changes in Asset Utilisation and Profit Margin
Which of the following is not an advantage of the average rate of return method? a.includes the amount of income earned over the entire life of the proposal b.takes into consideration the time value of money c.emphasizes accounting income d.easy to use
A firm that is increasing its capital structure leverage and increasing profitability will likely experience a (an) a. increasing value-to-book ratio b. decreasing return on assets c. volatile price-earnings ratio d. None of these answer choices are correct.
Capital account transactions are not affected by Select one: a. Investment diversification b. Risk c. Rate of return d. All the answers are correct e. Speculation
The claims (losses) incurred insuring against the peril may result in underwriting risk due to? a. Unexpected decreases in loss rates. b. Unexpected increases in investment yields or returns. c. Unexpected increases in loss rates. d. Unexpected decreases in investment yields or returns.

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