What Is the Objective of a Fair Value Hedge

question 15

Multiple Choice

What is the objective of a fair value hedge?

• A)To offset the losses due to changes in the value of an asset or liability
• B)To reduce the risk associated with future cash flows
• C)To predict future cash flows
• D)To predict the value of an asset or minimize the value of a liability
• E)None of the options are correct

---

Definitions:

Control Account

A summary account in the general ledger that consolidates and reflects the total of transactions recorded in subsidiary ledgers.

Customers' Names

Identifying information for individuals or entities that purchase goods or services from a business.

Subsidiary Ledger

A detailed ledger that contains the accounts of specific areas of business, supporting data for accounts in the general ledger.

Accounts Receivable

Financial obligations of customers towards a business for delivered products or services awaiting payment.