An Entity Holding Both Financial Assets and Liabilities Is Allowed

question 20

Multiple Choice

An entity holding both financial assets and liabilities is allowed to offset and determine fair value on the net position as long as: I the entity holds a net short position
II the entity holds a net long position
III the entity has a documented risk management strategy
IV the entity manages the group of net financial assets and liabilities on a net exposure basis

• A) I and II.
• B) I and III.
• C) II and IV.
• D) III and IV.

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Definitions:

Individual Demand

The quantity of a good or service that a single consumer is willing and able to purchase at various prices.

Damaged Goods

Products that have been impaired or harmed in some way, reducing their value, usefulness, or appeal.

High Margins

Refers to a significant difference between the cost of goods sold and the selling price, leading to high profits.

Metering

The process of measuring the consumption of utilities or services, such as electricity, gas, or water, typically for billing purposes.