The Move by Regulators Toward Market Value Accounting of the Loan

question 86

True/False

The move by regulators toward market value accounting of the loan portfolios will likely encourage sales of loans in the secondary markets.

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Definitions:

Zero-coupon Bonds

Bonds that do not offer interest payments but are sold at a deep discount to their face value, maturing at par.

Conversion Premium

The additional cost above the market value of the underlying asset that an investor pays to own a convertible security, such as convertible bonds.

Convertible Bond

A financial instrument that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Par Value

This term denotes the officially stated value of a share of stock or bond, serving as a legal capital threshold that companies cannot issue stock below.