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:

Sherman Act

A U.S. antitrust law passed in 1890 that prohibits monopolistic business practices and promotes competition.

Price-Fixing Scheme

An illegal arrangement between parties to set the price of goods or services at a certain level, often to limit competition.

Sherman Act

An anti-monopoly U.S. legislation which outlaws monopolistic business practices.

Criminal Prosecutions

Legal proceedings against an individual or entity charged with committing a crime, aiming to enforce the law and provide retribution, deterrence, rehabilitation, or incapacitation.