Final answer:
The concept of an FI's economic net worth as a market value accounting concept is true. It represents the market value of total assets minus total liabilities on a bank's balance sheet, reflecting the financial health of the institution.
Step-by-step explanation:
The statement that the concept of a financial institution's (FI's) economic net worth is a market value accounting concept is true. Economic net worth for a bank or any financial institution is essentially the market value of its total assets minus its total liabilities. In accounting, a balance sheet or T-account will reflect this concept, where assets are listed on one side and liabilities on the other, with the net worth (also known as equity) included on the liabilities side to balance the account. A positive net worth indicates a healthy financial state, whereas a negative net worth may signal bankruptcy.
When market conditions change, such as through interest rate fluctuations or default rates on loans, the market value of a bank's assets can change, which in turn affects the economic net worth of the institution. Hence, it is accurate to consider the economic net worth as a measure of a bank's valuation in accordance with market value accounting principles.