Which of the Following Statements Is True

question 47

Multiple Choice

Which of the following statements is true?

• A)Economically speaking, contingent assets and liabilities are contractual claims that might or might not impact on the economic value of a bank.
• B)Economically speaking, contingent assets and liabilities are contractual claims that do not impact on the economic value of a bank.
• C)Economically speaking, contingent assets and liabilities are contractual claims that directly impact on the economic value of a bank.
• D)Economically speaking, contingent assets and liabilities are contractual claims that indirectly impact on the economic value of a bank.

---

Definitions:

Accounting Profits

The net income for a company calculated by subtracting total expenses from total revenues, according to standard accounting practices.

Explicit Costs

Direct, out-of-pocket payments for inputs or resources used in the production of goods or services.

Uninsurable Risk

An eventuality for which the frequency or magnitude of potential losses is unpredictable or unknowable. Insurance companies are not willing to sell insurance against such risks.

Consumer Tastes

The preferences and inclinations of consumers regarding different products and services, which can shift over time affecting market demand.