Derivative Instruments Acquired to Hedge Exposure May Be Classified as Either

question 8

Essay

Derivative instruments acquired to hedge exposure may be classified as either a fair value hedge or a cash flow hedge.Distinguish between the two types of hedges.

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Definitions:

Frequency Histogram

A graphical representation of data that shows the number of observations within specific intervals, presenting the distribution of a data set.

Classes

Categories into which data, objects, or individuals are grouped based on similar characteristics or criteria.

Line Chart

A graphical representation that connects individual data points with lines to show trends over a period of time.

Variable

An attribute or detail that can change or alter.