4-30 Most securities firms are subject to large amounts of interest rate and market risk because of the large amount financial assets on the balance sheet.

Question

Quizplus · Accepted Answer

Securities firms typically hold a large amount of financial assets on their balance sheet, such as stocks, bonds, and derivatives. The value of these assets can be highly sensitive to changes in interest rates and market conditions, which can create significant risk for the firm. Therefore, most securities firms are subject to large amounts of interest rate and market risk.

4-30 Most Securities Firms Are Subject to Large Amounts of Interest