Sub: Accounting A financial guarantee contract is initiallyrecognized at?a) The premium receivedb) Fair valuec) The higher of premium or expected credit lossd) The guaranteed amount

Explanation of Financial Guarantee Contract: A financial guarantee contract is an agreement that…

Answered: A financial guarantee contract is…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 5QTD

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The default subsequent measurement base for financial liabilities is: Select one: amortised cost through profit or loss fair value using the effective interest rate. amortised cost using the effective interest rate fair value through profit or loss
Loans and receivable should be measured subsequent to initial recognition at * a. Amortized cost using the straight line method b. Fair value c. Fair value plus transaction cost d. Amortized cost using the effective interest method
A funding component is O the total funding required for a specified decision point O a long-term source of capital O a collateral agreement, such as pledging an asset as security for a mortgage bond O an ancillary requirement on a loan that affects its risk, such as a restrictive covenant
A contract requiring a specified future monetary payment at a specified future point in time in exchange for the delivery of a specific asset is called a: *A. nonconvertible option.B. hedge.C. long contract.D. swap.
Contingent liabilities must be recorded if: O The future event is probable and the amount owed can be reasonably estimated O The future event is remote O The future event is reasonably possible O The amount owed cannot be reasonably estimated All of the above
A credit derivative allows creditors and debtors to _________ their exposure to credit risk. For example,______able to effectively transfer some or all of the risk of a__________defaulting to a third party in exchange for a __________.
A guarantee issued by an FI that obligates the FI to pay if the purchaser of the letter defaults on a debt is called a a. loan commitment. b. forward rate agreement. c. credit swap agreement. d. collar. e. None of these options are correct.
1. The significant risk that is transferred from the policyholder to the issuer of an insurance contract is:a. Lapse or persistency riskb. Financial riskc. Expense riskd. Insurance risk2. Under the general model of PFRS 17, a group of insurance contracts is initially measured at:a. The fulfillment cash flowsb. The contractual service marginc. Either a or bd. Both a and b3. A group of insurance contracts is subsequently measured at:a. The liability for remaining coverageb. The liability for incurred claimsc. Either a or bd. Both a and b4. According to PFRS 17, an insurance contract is NOT derecognized when:a. Expiredb. Terms have been modified, and the modification is not substantivec. Terms have been modified, and the modification is substantived. Extinguished5. According to PFRS 17, an accounting service result is recognized in:a. Profit or lossb. Other comprehensive incomec. Statement of financial positiond. Partly in profit or loss, and partly in other comprehensive incomeUse the…
2. Which of the following may not be equal to the contract rate of interest? a. stated rateb. nominal ratec. face rated. effective rate
Which of the following risks cannot be hedged?A. CreditB. LiquidityC. CurrencyD. Duration
7. Which of the following is not one of the factors impacting the borrowing rate of repo assets? OA Quality of the collateral OB. Terms of the repo OC. Delivery requirements O D. Denomination of the asset OE Seasonal factors
For most long-term liabilities, an important consideration is that they are properly authorized. True or False?

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A financial guarantee contract is initially recognized at? a) The premium received b) Fair value c) The higher of premium or expected credit loss d) The guaranteed amount