All of the Following Are True Statements When Measuring Hedge

question 56

Multiple Choice

All of the following are true statements when measuring hedge effectiveness except:

• A) Effectiveness means there is an approximate offset with the range of 80% to 125% of the changes in the fair value of the cash flows
• B) Effectiveness means there is an approximate offset in fair value to the risk being hedged.
• C) A Company may elect to choose from several different measures for assessing hedge effectiveness.
• D) Effectiveness must be assessed at least annually when the company reports their annual financial statements.

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Definitions:

Value-Based Pricing

Pricing strategy where the selling price is determined by estimating the product's or service's value to the customer rather than its cost of production or market competition.

Preventive Maintenance

Routine maintenance and inspections carried out to prevent potential problems or failures before they occur.

Useful Life

The estimated period of time over which an asset is expected to be usable by the entity, after which it may no longer be economically beneficial to keep.

Economic Value

The measure of the benefit obtained from a good or service, often compared to potential alternatives.