One of the LOS in reading 33 is: “Describe the considerations affecting balance sheet management for banks and insurance companies.”
Are specific formulas and calculations testable from this reading?
The reading covers the affects of changes in financial leverage and changes in the composition of assets and liabilities on the risk of shareholder equity. The reading delves deeper going into the formulas to calculate a numerical value for the impact. The optional cases (blue boxes) and end of chapter practice problems also involve specific calculations.
Since the LOS states, “describe the considerations”, are calculations testable or do the readings include them just to prove the main points (i.e., supplementary information)?