The AASB 132 Financial Instruments: Presentation Definition of a Financial

question 12

Multiple Choice

The AASB 132 Financial Instruments: Presentation definition of a financial asset does not include any asset that is:

• A) an equity instrument of another entity.
• B) a contractual right to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity.
• C) a contract that will be settled in the entity's own equity instruments.
• D) a contractual obligation to deliver cash or another financial asset to another entity.

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Definitions:

Liquidity Preference Theory

A theory suggesting that people prefer to hold their wealth in liquid form for ease of spending but are willing to accept less liquidity for a higher return.

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage rate.

Money Demand Curve

A graph showing the relationship between the quantity of money people want to hold and the interest rate, inversely related.

Money Supply

The total amount of monetary assets available within an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.