Which of the Following Statements Is True

question 20

Multiple Choice

Which of the following statements is true?

• A)One problem with the repricing gap is over-aggregation, which means that while the dollar value of asset-sensitive liabilities and assets within one bucket might be the same, the repricing timing for assets and liabilities within this bucket might differ.
• B)One problem with the repricing gap is over-aggregation, which means that managers cannot make informed decisions about interest rate movements.
• C)An advantage of the repricing gap is over-aggregation, which means that the information provided in the buckets is precise.
• D)None of the listed options are correct.

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Definitions:

Gross Profit Method

A technique used for estimating inventory and cost of goods sold, calculated by applying a gross profit percentage to sales.

Retail Inventory Method

An accounting method used by retailers to estimate inventory value by converting retail prices to cost prices.

Perpetual Inventory

A system of accounting for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.