An Entity Holding Both Financial Assets and Liabilities Is Allowed

question 21

Multiple Choice

An entity holding both financial assets and liabilities is allowed to offset and determine fair value on the net position as long as:
I they hold a net long position
II they hold a net short position
III they have a documented risk management strategy
IV the manage the group of net financial assets and liabilities on a net exposure basis
v.transactions are conducted in an orderly market

• A)I and III
• B)II and IV
• C)III and IV
• D)II and V

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Definitions:

Complementary Goods

Products or services that are used together, where the demand for one is linked to the demand for another.

Inferior Goods

Goods for which demand decreases as the income of the consumer increases, opposite to normal goods.

Income Increases

A rise in the amount of money received, especially on a regular basis, for work or through investments, which can impact consumption, savings, and overall economic well-being.

Quantity Demanded

The specific amount of a product that consumers are willing to buy at a given price, holding all other factors constant.