Accounting Keeps Track of the Financial State of a Business

question 13

Multiple Choice

Accounting keeps track of the financial state of a business.The accounting report that demonstrates the growth in assets is:

• A)Net income statement
• B)Balance sheet
• C)Cash flow statement
• D)Operating statement

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Definitions:

Subprime Mortgages

Loans granted to borrowers with poor credit histories, which carry higher interest rates than standard mortgages to compensate for the higher risk.

Mortgage-backed CDOs

Complex structured finance products that pool together cash flow-generating assets and repackages this asset pool into tranches that can be sold to investors, specifically focusing on mortgage-backed securities.

Variable Rate Loans

Loans with interest rates that can fluctuate over time based on an underlying benchmark rate or index.

Tranches

Portions or slices of debt or securities that are structured to divide risk or return in a way that is marketable to different investors.