If You Lend for 3 Months and Borrow for 6

question 491

Multiple Choice

If you lend for 3 months and borrow for 6 months, you may be said to:

• A) Be over-lent
• B) Have a negative gap
• C) Be exposed to higher interest rates
• D) Be over-borrowed

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Definitions:

Asset Acquired

An item of economic value obtained by a company, expected to provide future benefit by generating cash flows or reducing expenses.

Future Service Potential

The potential of an asset to contribute to future operations and cash flows of an organization.

Physical Substance

A characteristic of tangible assets, meaning they have a physical form and can be seen, touched, and measured.

Management Consulting

An area of public accounting ranging from development of accounting and computer systems to support services for marketing projects and merger and acquisition activities.