Banking Practice Exam

Image Description

Question: 1 / 400

According to FASB 157, Level 3 assets are labeled in which way?

Marking to market

Marking to matrix

Marking to myth

Level 3 assets, as defined by FASB 157, are characterized by their reliance on unobservable inputs for valuation. This means that the prices of these assets cannot be determined through direct market transactions or other observable measures. Essentially, they are valued using estimates or assumptions based on internal models, which makes them subjectively assessed. The term "marking to myth" humorously captures this concept, as it implies that the valuation is based more on assumptions or theoretical models than on solid market data.

Because these assets do not have a transparent market price, their valuations can be highly variable and prone to significant judgment by the valuator. This contrasts with Level 1 and Level 2 assets, which use observable market data and inputs for pricing, thus providing more reliability and clarity in their valuation process.

Get further explanation with Examzify DeepDiveBeta

Marking to major

Next Question

Report this question

Download Banking Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy