Which of the Following Is TRUE of the Fair Value

question 176

Multiple Choice

Which of the following is TRUE of the Fair Value Adjustment - Trading account for trading debt investments?

• A) It will always have a credit balance.
• B) It will always have a debit balance.
• C) It is considered as an adjunct account if it has a credit balance.
• D) It is considered as an adjunct account if it has a debit balance.

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Definitions:

Lender

An individual, institution, or entity that provides funds to another with the expectation that the funds will be repaid, often with interest.

Utility Function

A mathematical representation that ranks an individual's preferences over a set of goods and services.

Interest Rate

The share of a loan subject to interest charges to the borrower, typically denoted as an annual percentage of the loan's outstanding sum.

Nominal Interest Rate

The stated interest rate on a loan or investment, not adjusted for inflation.