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Explanation:
The impact of liquidity options is indeed considered in two ways: the impact on the balance sheet and the financial impact, which can be either positive or negative, on cash flows. The balance sheet impact refers to how liquidity options can affect the assets, liabilities, and equity of a company. The financial impact on cash flows refers to how liquidity options can influence the inflow and outflow of cash in a company. Therefore, choice A accurately identifies the two ways in which the impact of liquidity options is considered.
Choice B is incorrect. While a (positive or negative) financial impact is indeed one of the ways in which the impact of liquidity options is considered, contract deposit rate does not directly evaluate the impact of liquidity options. Contract deposit rate refers to the interest rate paid on deposits, which may be influenced by liquidity but it's not a direct measure of its impact.
Choice C is incorrect. Although liquidity's impact on the balance sheet is one way to evaluate its effect, contract deposit rate as explained above does not directly assess this effect.
Choice D is incorrect. Available cash reserves can be an outcome or result of managing
Q.3924 The liquidity option impact is considered in two ways. A student was asked to give the ways, and the following choices were recorded as her responses after repeated trials. Which of the choices give the most accurate answer?
A
Liquidity impact on the balance sheet, and a (positive or negative) financial impact on cash flows.
B
A (positive or negative) financial impact and contract deposit rate.
C
Contract deposit rate and liquidity impact on the balance sheet
D
Available cash reserves and financial impact
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