Market value of equity is more appropriate than book value of equity at reflecting changes in the credit risk and interest rate risk of an FI.

Name: Market value of equity is more appropriate than book value of equity at reflecting changes in the credit risk and interest rate risk of an FI.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Market value takes into account fluctuations in the market that may affect a FI's credit risk and interest rate risk, while book value only reflects historical accounting values.

Market Value of Equity Is More Appropriate Than Book Value