Which of the Following Statements Is Not Correct with Respect

question 77

Multiple Choice

Which of the following statements is not correct with respect to GASB Statement No.53 which establishes reporting requirements for governments entering into derivative instruments?

• A) Derivatives include swaps, options, forward contracts and future contracts.
• B) If a derivative is effective in reducing a government's exposure to identifiable risks, the changes in the value of the derivative are reflected as investment gains or losses in the period that the value changes.
• C) If a hedge derivative is deemed ineffective it is classified as investment purpose.
• D) Statement No. 53 applies only to reporting at the government-wide level for derivatives held by governmental funds, not the fund-basis statements.

---

Definitions:

Risk-free Rate

The rate of return on an investment with zero risk, typically based on government bonds.

Dividend Increase

A company's decision to raise the amount of dividends paid to its shareholders, often viewed as a positive signal of the company's profitability and future prospects.

Required Return

Required return is the minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.

Dividends

Funds disbursed by a company to its shareholders, typically originating from the firm's earnings.