For each of the statement below, assess whether the statement is TRUE, FALSE or UNCLEAR. Provide...

For each of the statement below, assess whether the statement is TRUE, FALSE or UNCLEAR. Provide an explanation /illustration of why this is the case. Without an explanation or with an explanation that is off topic, you will receive 0 mark.

(a) The buyback of an issued financial instrument is equivalent, in an accounting perspective, to the acquisition of an asset

(c) ADI money creation power comes from the loans ADI make.

d) The same Australian government bond can bring a different return to its first investors.

Expert Solution

The buyback of an issued financial instrument is equivalent, in an accounting perspective, to the acquisition of an asset--False

Buyback means the companies are repurchasing its securities issued in the market. It would reduce the asset and liabilities side of the balance sheet. Whereas when the companies purchases an asset the total asset remains unchanged. i.e Cash reduced and specific asset purchased increased.

ADI money creation power comes from the loans ADI make-

ADI means Authorised deposit taking institutions. They accept deposit from public and lend in the market thereaby creating money supply.

The same Australian government bond can bring a different return to its first investors.-True

The bond provides fixed coupons to its holder. The return i.e YTM depends on the interest rate in the market.

jeff jeffy answered 2 years ago

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For each of the statement below, assess whether the statement is TRUE, FALSE or UNCLEAR. Provide...

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