Which of the Following Statements Is True

question 87

Multiple Choice

Which of the following statements is true?

• A) U.S. Treasury securities with relevant maturities are used as the basic cost of money and lenders add premiums for risk and other factors.
• B) Some lenders determine a prospective borrower's risk class and determine the rates charged on loans with similar maturities by firms in the same risk class.
• C) All borrowers are charge the same rate regardless of their risk class.
• D) Both (a) and (b) are true
• E) None of the above statements are true.

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Definitions:

Fair Value

The estimated market value of an asset or liability, based on current prices in an active market.

Stock Market

A public market for buying and selling equity securities and derivatives of companies, facilitating capital exchange between investors.

Trading Securities

Financial instruments that are bought and sold for the purpose of generating profit from short-term price movements.

Fair Value Method

An accounting strategy used to assess the current market value of an asset or liability rather than its historical cost.