Final answer:
Selling equipment for cash is reflected in the investing activities on the statement of cash flows. The value of loans in the secondary market varies with borrower reliability, changes in economy-wide interest rates, and borrower's improved financial state. None of the given options are correct.
Step-by-step explanation:
Selling equipment for cash is reported on the statement of cash flows under investing activities. This category on the cash flow statement shows the inflow and outflow of cash from activities related to investments such as the purchase or sale of an asset, loans made to vendors or received from customers, or any payments related to a merger or acquisition.
When talking about a bank's balance sheet, the money listed under assets might not necessarily be in the bank because banks typically use a portion of the deposits to extend loans to other customers. This practice is known as fractional reserve banking.
In the secondary market, one would pay more or less for a loan based on various factors. If the borrower has been late on loan payments, the loan would be considered riskier, and thus, one would pay less for it. When interest rates rise, existing loans with lower interest rates become less attractive, so one would pay less for such loans. Conversely, if a borrower's financial situation has improved significantly, as evidenced by a firm declaring high profits, the loan would be seen as safer, making one willing to pay more. Similarly, if interest rates fall, loans with higher interest rates are more attractive, and one would be willing to pay more for them.