ARM 401 Segment C Assignment 9
A construction company based in the U.S. has building contracts in five
different foreign nations. The construction company agreed to accept payment
for its work in each country's currency. The risk of loss of value when these
foreign payments are converted to U.S. dollars is called - correct answer
✔Exchange-rate risk
Jones, Inc. buys grain from local farmers and re-sells the grain to a number of
customers. Jones, Inc. has been approached by Snack Cracker Company.
Snack Cracker would like to purchase wheat and corn from Jones, Inc. to use
in the crackers it produces. Snack Cracker would like to pay for the grain
within 30 days of the date the grain is delivered. As Snack Cracker is a new
customer, Jones, Inc. asked to review its financial statements. Which balance
sheet ratio would best assist Jones, Inc. in determining if Snack Cracker can
pay for the grain within 30 days of the sale? - correct answer ✔Current ratio
One of the main functions of a risk-based capital allocation model is - correct
answer ✔To prospectively determine the amount of risk associated with a
business activity.
Economic capital attempts to quantify the various risks faced by an
organization. One such risk is loss of value because of not properly matching
asset and liability cash flows. This risk is called - correct answer ✔Liquidity
risk.
The fair value of assets minus the fair value of liabilities, with both of these
measures adjusted for risk, is known as - correct answer ✔Market value
surplus.
The basic accounting equation on which the balance sheet is structured is -
correct answer ✔Assets = Liabilities + Net Worth
A construction company based in the U.S. has building contracts in five
different foreign nations. The construction company agreed to accept payment
for its work in each country's currency. The risk of loss of value when these
foreign payments are converted to U.S. dollars is called - correct answer
✔Exchange-rate risk
Jones, Inc. buys grain from local farmers and re-sells the grain to a number of
customers. Jones, Inc. has been approached by Snack Cracker Company.
Snack Cracker would like to purchase wheat and corn from Jones, Inc. to use
in the crackers it produces. Snack Cracker would like to pay for the grain
within 30 days of the date the grain is delivered. As Snack Cracker is a new
customer, Jones, Inc. asked to review its financial statements. Which balance
sheet ratio would best assist Jones, Inc. in determining if Snack Cracker can
pay for the grain within 30 days of the sale? - correct answer ✔Current ratio
One of the main functions of a risk-based capital allocation model is - correct
answer ✔To prospectively determine the amount of risk associated with a
business activity.
Economic capital attempts to quantify the various risks faced by an
organization. One such risk is loss of value because of not properly matching
asset and liability cash flows. This risk is called - correct answer ✔Liquidity
risk.
The fair value of assets minus the fair value of liabilities, with both of these
measures adjusted for risk, is known as - correct answer ✔Market value
surplus.
The basic accounting equation on which the balance sheet is structured is -
correct answer ✔Assets = Liabilities + Net Worth
