Amy Farmer is planning to invest in the stock of Guthrie National Bank.She is examining ratios of the book value of the assets to the market value of the assets and the market value of the bonds held by the bank to their recorded value.What type of risk is Amy attempting to measure with these ratios?

Question

Quizplus · Accepted Answer

The ratios that Amy is examining - book value of assets to market value of assets and market value of bonds to their recorded value - are both related to the market value of the bank's assets and liabilities. Market risk refers to the risk of loss due to changes in market conditions, such as changes in interest rates or economic conditions. By examining these ratios, Amy is trying to understand the bank's exposure to market risk.

Amy Farmer Is Planning to Invest in the Stock of Guthrie