Off-balance sheet positions are risky because they may yield negative future cash flows.

Name: Off-balance sheet positions are risky because they may yield negative future cash flows.
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Question

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Off-balance sheet positions are not reported on a company's balance sheet but they still have the potential to generate future cash flows that may be negative, which can increase a company's overall risk. Examples of off-balance sheet positions include leases, guarantees, and derivatives.

Off-Balance Sheet Positions Are Risky Because They May Yield Negative