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Determining the classification of financial instruments

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Reference no: EM132735978

In distinguishing financial liabilities from equity, legal form is the most important factor to examine

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Problem 1: Do you agree with this statement? Relate your discussion to the notion of equity risk. Provide two examples to substantiate your discussion concerning the usefulness of equity risk in determining the classification of financial instruments.

Hint: As the name equity risk implies, it is the risk of holding equity instead of holding other forms of investments. What do you think can be the risks associated with holding equity?

Reference no: EM132735978

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