Final answer:
The auditor's objectives include confirming that securities are the client's property, exist, and are correctly classified, not their authenticity. The balance sheet may list money that's lent out, and loan values in the secondary market fluctuate due to various economic factors.
Step-by-step explanation:
The auditor's primary objectives in an examination of marketable securities do not include determining whether the securities are authentic. Rather, the objectives are to confirm that the securities are the property of the client, ensure they actually exist, and verify that they are properly classified on the balance sheet.
Bank Balance Sheet and Marketable Securities This is known as fractional reserve banking, where only a fraction of the bank's deposits are kept in reserve, and the rest is used for loans and other investments.
Buying Loans in the Secondary Market
When buying loans in the secondary market, various factors affect the price one might be willing to pay for these loans:
Functions of Money and Double-Coincidence of Wants
The four functions that money serves are medium of exchange, unit of account, store of value, and standard of deferred payment.
The existence of money simplifies the process of buying and selling by eliminating the need for a double-coincidence of wants, which is the situation where two parties have goods or services that the other party desires, thus facilitating the trade directly.