Final answer:
An increase in current assets other than cash generally results in a decrease in cash, while a decrease in current assets typically causes an increase in cash. Factors affecting the valuation of loans in the secondary market include borrower creditworthiness, interest rate changes, and the borrower's profitability.
Step-by-step explanation:
When current assets other than cash increase, typically there is an outflow of cash to pay for those assets unless they increased due to non-cash transactions (like credit purchases or asset conversions). Therefore, the correct answer is C) An increase in current assets other than cash will lead to a decrease in cash, while a decrease will lead to an increase in cash. This is because to increase current assets (like inventory or accounts receivable), a company might use cash, while a decrease in those assets (like selling inventory or collecting accounts receivable) could bring cash into the company.
Conversely, the money listed as assets on a bank balance sheet, for example, may not be in the bank because those funds may be tied up in loans to customers and other investments made by the bank. Evaluating the value of loans in the secondary market relies on factors such as the creditworthiness of the borrower, changes in the general level of interest rates, and the profitability of the borrowing company. These considerations impact the price a buyer is willing to pay for the right to collect loan payments.