CFA Practice Question

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CFA Practice Question

Asset revaluation ______

I. always reduces reported leverage.
II. can be used by management to manage earnings.
III. affects depreciation, total assets, and shareholders' equity.
Correct Answer: II and III

I is false; only an upward revaluation can be used to reduce reported leverage.

User Contributed Comments 7

User Comment
boddunah done finally with this chapter .wow a lot to memorize.
bantoo Great questions for practice
Lot to memorise.
moneyguy How does an upward revaluation reduce reported leverage?
johntan1979 Increased asset value ==> leverage is asset/equity
Adon upward revaluation increases assets and equity equally. since leverage is almost always positive, increasing numerator and denominator equally will reduce the fraction (4/3 is less than 3/2)
Shaan23 How are you done this chapter? There's like three more sections.
ashish100 lol ^
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