Which of the Following Is True of Off-Balance-Sheet Activities

question 91

Multiple Choice

Which of the following is true of off-balance-sheet activities?

• A)They involve generation of fees without exposure to any risk.
• B)They include contingent activities recorded in the current balance sheet.
• C)They invite regulatory costs and additional "taxes."
• D)They have both risk-reducing as well as risk-increasing attributes.
• E)The risk involved is best represented by notional or face value.

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Definitions:

Trading Investments

Investments in securities for the purpose of selling them in the near term to generate profit from short-term price fluctuations.

Statement of Income

A financial document that reports a company's financial performance over a specific period, detailing revenues, expenses, and net profit or loss.

Long-Term Investments

Assets that a company intends to hold for more than one year, including stocks, bonds, or real estate.

Bonds

A fixed-income investment representing a loan made by an investor to a borrower, usually corporate or governmental.