Ask Question
12 December, 10:39

Off-balance sheet activities involving guarantees of securities and back-up

a) credit lines have no impact on the risk a bank faces.

b) increase the risk a bank faces.

c) greatly reduce the risk a bank faces.

d) slightly reduce the risk a bank faces.

+5
Answers (1)
  1. 12 December, 11:13
    0
    B) increase the risk a bank faces.

    Explanation:

    Off-balance sheet activities include all the bank's activities regarding assets, debts or other financing activities that are not presented in the bank's balance sheet, e. g. issuance of guarantees, commitments to make loans, etc.

    Banks incur in this type of activities because generally they charge fees for them (increase revenue) without affecting measures of indebtedness like debt to equity ratio.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Off-balance sheet activities involving guarantees of securities and back-up a) credit lines have no impact on the risk a bank faces. b) ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers