Negative Correlation of Returns of a Proposed New Branch with Returns

question 98

True/False

Negative correlation of returns of a proposed new branch with returns of the existing branch offices and other assets can serve to lower the overall bank's riskiness and is an important justification for branch establishment.This is referred to as geographic diversification effect.

Calculate book values and understand depreciation and its impact on financial statements.

Identify and adjust entries for prepaid expenses and unearned revenues.

Understand the effect of adjusting entries on the balance sheet and income statement.

Recognize the types of accounts that typically require year-end adjustments.

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Definitions:

Preexisting Moral Obligation

A moral duty or responsibility that already exists before any new agreement or contract is made.

Consideration

The value (such as money, a service, or a promise) that is exchanged between parties in a contract.

Doctrine of Promissory Estoppel

A legal principle that prevents a promisor from retracting a promise that the promisee has relied upon, resulting in a significant change of position.

Disputed Debt

A disagreement between a creditor and a debtor over the existence, amount, or terms of repayment of a debt.