True or False: Securities held in "street name" or "nominee name" are not held "in the name of the government" for custodial credit risk analysis.

Prepare for the CPFO Accounting Test. Study with multiple choice questions, each with hints and explanations. Set yourself up for success!

Securities held in "street name" or "nominee name" refer to the practice where financial instruments are held in the name of a broker or another financial institution, instead of the individual or entity that owns them. This method is commonly used to facilitate transactions and provide liquidity in the market.

For custodial credit risk analysis, it is significant to note that securities held in street name are, in essence, not directly held in the name of the governmental entity or the ultimate investor. However, the underlying ownership remains with the government entity or the investors, which means that even though these securities are not titled in the name of the government, they can still represent an obligation or asset of the entity.

Thus, stating that securities in street name are not held "in the name of the government" accurately reflects the custodial structure of these assets, aligning with common accounting and financial principles. This underscores that while the actual instruments may not be titled under the government, they still belong to it or the specific organization, highlighting the importance of understanding custodial credit risk associated with such arrangements.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy