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

question 177

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.

---

Definitions:

ROCE

Return on Capital Employed; a financial ratio that measures a company's profitability and the efficiency with which its capital is used.

Financial Flexibility

The ability of an organization to adapt its financing and investment strategies in response to changes in the marketplace or its own operations.

Fiscal Stress

A situation in which a government struggles to meet its financial commitments or to balance its budget.

Credit Worthiness

An assessment of a borrower's ability to repay debts based on their financial history, credit score, and other factors.