A Financial Reporting Entity Is Defined as a Primary Government

question 11

True/False

A financial reporting entity is defined as a primary government, as well as all other organizations that have an operational relationship with the primary government.

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Definitions:

A Credit Rating

This is an evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt and an implicit forecast of the likelihood of the debtor defaulting.

Note

Unsecured debt, usually with a maturity under 10 years.

Protective Covenant

A clause in a financial contract that restricts certain actions of the borrower to protect the lender's interests.

Liquidity Premium

The additional return investors demand for holding a security that is not easily convertible into cash without loss of value.