Which of the Following Statements Is Not True

question 2

Multiple Choice

Which of the following statements is not true?

• A)Under the fair value through other comprehensive income model gains and losses are critical to the evaluation of management.
• B)Under the fair value through profit or loss model, both realized and unrealized gains and losses are reported in the income statement.
• C)Under the amortized cost model, no unrealized gains or losses are reported.
• D)Non-strategic investments are purchased to generate investment income.

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Definitions:

Inverse Floaters

Bonds that have coupon rates that move inversely to some reference rate, typically a short-term interest rate.

Coupon Rates

The annual interest rate paid on a bond, expressed as a percentage of the face value.

Interest Rates

The charge, as a percentage of the principal sum, levied by a lender on a borrower for asset usage.

Callable Bond

A type of bond that gives the issuer the right to repay the bond before its maturity date, often at a predetermined price.