Conservatism means: a)not underestimatingasset values, when faced with uncertainty aboutthe value of assets and liabilities. b)using themost optimistic measurement when faced withuncertainty about the value of assets andliabilities. c)not overestimating liabilities, whenfaced with the uncertainty about the value ofassets and liabilities. d)using the least optimisticmeasurement when faced with uncertaintyabout the value of assets and liabilities.

Accounting principles means the fundamental upon which the whole accounting is based. Every entity…

Answered: Conservatism means: a)not…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter10: Valuing Early-stage Ventures

Section: Chapter Questions

Problem 3DQ

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Hedging is matching the maturities of assets and liabilities to reduce risk. Hedging is matching the maturities of assets and liabilities to reduce risk. is it true or false?
Critically evaluate the pros and cons of the following statement: Financial statements are useless because they present assets at their historical costs rather than at their fair market values.
When adding a risky asset to a portfolio of may risky assets, which property of the asset has a greater influence on risk: its standard deviation or its covariance with other assets? Explain
any risk attached to a financial asset should not be considered when making an investment decision because all financial assets are risky. true or false?
What are some advantages of matching the maturities of claims against assets with the lives of theassets financed by those claims? Is it feasible for afirm to match perfectly the maturities of all assetsand claims against assets? Why might a firm deliberately mismatch some asset and claim maturities?
What does it mean to adopt a maturity matching approach to financing assets, includingcurrent assets? How would a more aggressive or a more conservative approach differ fromthe maturity matching approach, and how would each affect expected profits and risk? Ingeneral, is one approach better than the others?
When calculating a client’s net worth always use the sentiment value of each asset and the full, or outstanding, balance due for each liability. A. True B. False
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In current purchasing power technique (a) Why is it necessary to consider monetary assetsseparately from nonmonetary assets? Analyze withexamples. (b) Why does holding monetary assets lead to apurchasing power loss, but holding nonmonetary assetsdoes not lead to a purchasing power loss? Analyze withexamples
Investors will pay a premium to invest in risky assets. OA. True OB. False
Risks that are insurable because their probabilities can be calculated precisely enough for the risk to be quantified. a) Speculative b) Explicit c) Measured d) Pure
Fair Value Accounting and Valuation in 3 Steps: Asset or Liability Identification: The first step involves identifying the specific assets or liabilities that will be measured at fair value. This could include financial instruments, tangible assets, intangible assets, or other items on the balance sheet. Market-Based Valuation Techniques: Fair value is determined using market-based valuation techniques. This may involve assessing current market prices, recent transactions, or employing valuation models such as discounted cash flows, comparable sales, or option pricing models. Consistent Application and Disclosure: Fair value accounting requires consistent application of valuation methods across reporting periods. Additionally, transparency and disclosure are crucial, with companies providing detailed information about the inputs, assumptions, and methods used in fair value measurements. Objective Type Question: In fair value accounting, what is the primary purpose of…

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