Which of the Following Is Not a Disclosure for Derivatives

question 26

Multiple Choice

Which of the following is not a disclosure for derivatives required under SFAS No.133?

• A) Firms must describe their risk management strategy and how particular derivatives
• Help accomplish their hedging objectives.
• B) For fair value and cash flow hedges, firms must disclose the net gain or loss recognized
• In earnings resulting from the hedges' ineffectiveness and the line item on the income statement that includes this net gain or loss.
• C) For cash flow hedges, firms must describe the transactions or events that will result
• In reclassifying gains and losses from other comprehensive income to net income
• And the estimated amount of such reclassifications during the next 12 months.
• D) The specifics of a model that simulates with a 95 percent or other confidence level the minimum, maximum, or average amount of loss that a firm would incur.

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Definitions:

Management

The coordination and administration of tasks to achieve a company's objectives, involving planning, organizing, leading, and controlling resources.

Fixed Cost Per Unit

The cost that does not change with the level of production or sales, divided by the number of units produced, to determine the fixed cost allocated to each unit.

Level Of Activity

A measure of the volume of production or work done in a specific period, often used in costing and productivity analysis.

Variable Costs

Costs that change in proportion to the good or service that a business produces, varying depending on production volume.