Asked by Sarenthia Davis on Jul 15, 2024
Verified
Which of the following is not an example of a level 2 input?
A) Quoted prices for identical or similar assets or liabilities in markets that are not active.
B) Inputs such as interest rates and yield curves, volatilities, prepayment speeds, and credit risks.
C) Measuring accounts receivable based on the entity's historical records of recoverability.
D) Inputs that are derived from or corroborated by observable market data by correlation or other means.
Level 2 Input
Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, directly or indirectly, such as quoted prices for similar assets or liabilities.
Interest Rates
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the outstanding loan.
Yield Curves
Graphs showing the relationship between interest rates and the time to maturity of debt securities.
- Recognize and distinguish among Level 1, Level 2, and Level 3 inputs.
Verified Answer
Learning Objectives
- Recognize and distinguish among Level 1, Level 2, and Level 3 inputs.
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