Which of the following statements is true regarding market value effects?
A)the repricing model highlights market value effects.
B)interest rate changes have a market value effect in addition to an income effect on asset and liability values.
C)when assuming a book value accounting approach, market value effects are considered.
D)none of the above are true.
E)all of the above are true.

Question

Quizplus · Accepted Answer

Market value effects refer to the changes in the market value of assets and liabilities due to changes in market conditions such as interest rates, exchange rates, and stock prices. The repricing model considers these effects by analyzing the impact of interest rate changes on the market value of assets and liabilities. Therefore, statement A is true. Statement C is false as book value accounting approach does not consider market value effects. Statement B is true as interest rate changes have both an income effect and a market value effect on assets and liabilities. Statement D is false and the answer is not E as only statement B is true.

Which of the Following Statements Is True Regarding Market Value