A Fair Value Hedge Differs from a Cash Flow Hedge

question 31

Multiple Choice

A fair value hedge differs from a cash flow hedge because a fair value hedge

• A)cannot be used for firm purchase or sales commitments.
• B)is not recorded unless it is a highly-effective hedge.
• C)records gains or losses in the value of the derivative directly to earnings of the company.
• D)defers the gains or losses in the value of the derivative using Other Comprehensive Income.

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