In a Base-Case Scenario, the Output Is Determined by Assuming

question 22

Multiple Choice

In a base-case scenario, the output is determined by assuming

• A)worst values that can be expected for the random variables of a model.
• B)the mean trial values for the random variables of a model.
• C)best values that can be expected for the random variables of a model.
• D)the most likely values for the random variables of a model.

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Definitions:

Fair-value Hedge

A hedging strategy aimed at offsetting changes in the fair value of an asset or liability or an identified portion of such an asset or liability.

Other Comprehensive Income

Earnings that are not part of net income, arising from activities outside of the ordinary operations, and reported separately in equity.

Hedging Instrument

A financial contract used to offset potential losses or gains that may be incurred by a companion investment.

Forward Contract

A financial agreement between two parties to buy or sell an asset at a specified future time at a price agreed upon today, not traded on an exchange.