Which of the Following Is True with Respect to Performing

question 61

Multiple Choice

Which of the following is true with respect to performing consolidation adjustments for intragroup borrowings and the corresponding interest?

• A)It is not necessary to perform consolidation adjustments with respect to intragroup borrowings and the corresponding interest.
• B)From the group's perspective, these transactions create assets and liabilities and revenues and expenses that do not exist in terms of the group's relationship with external entities
• C)The adjustment to the asset and liability is only necessary in the year the intragroup loan is issued.
• D)Only a tax adjustment is necessary.

---

Definitions:

Price Decline

Price decline refers to the decrease in the market price of a security or asset over a specific period.

Equal Magnitude

A term used to describe quantities or values that are the same in size, amount, or degree.

Pure Yield Pickup Swap

A strategy where an investor moves into higher-yielding securities, trading off shorter-duration or lower-quality bonds for higher yield, assuming additional risk.

Longer-Duration Bonds

Fixed-income securities with extended time frames to maturity, typically exposing investors to higher interest rate risk but potentially offering higher yields.