The statement that is most correct regarding the application of fair value accounting and the global financial crisis (GFC)is:
A)There is no connection between the application of fair value accounting and the GFC
B)Some regard the practice of fair value accounting as a contributing factor in the rapid spread of the GFC from its origins in the US sub-prime mortgage market to the rest of the world
C)Fair value accounting was one of the primary causes of the GFC
D)There were no changes in international accounting standards relating to fair value as a result of the GFC

Question

Quizplus · Accepted Answer

Some experts and industry leaders have argued that the use of fair value accounting, particularly in the valuation of complex financial instruments, contributed to the spread of the GFC by exacerbating market volatility and amplifying losses. However, it is important to note that fair value accounting was not the sole cause of the crisis and other factors, such as lax lending standards and inadequate risk management practices, also played a role. Additionally, there were some changes made to international accounting standards in response to the GFC, including the introduction of new disclosure requirements for fair value measurements.

The Statement That Is Most Correct Regarding the Application of Fair