Question

The concept that a company should take special care to not overstate its assets is known as?

1) Asset management
2) Asset valuation
3) Asset protection
4) Asset depreciation

Answer 1

The concept that a company should not overstate its assets is known as asset valuation, which can be particularly complex for banks whose assets are mainly loans.

Step-by-step explanation:

The concept that a company should take special care to not overstate the value of its assets is known as asset valuation. In the context of bank supervision, the valuation of assets is complex due to the nature of banking operations. Banks' assets primarily consist of loans, and the valuation of these loans is not always clear-cut. It involves making estimates about the risk of loan default by borrowers, which can become particularly complicated with cross-border loans or with financial arrangements more complex than a basic loan.