Why Is the Value of Many Derivatives Difficult to Determine

question 33

Multiple Choice

Why is the value of many derivatives difficult to determine for accounting purposes?

• A)Many derivative decline in value over time,so only average values can be determined.
• B)Many derivative fluctuate in value over time,so only average values can be determined.
• C)Many derivatives are controlled by governments,so the stated value of a derivative may not be its actual value.
• D)Many derivatives are private contracts for which there is no active market,so values are difficult to determine.

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Definitions:

Facility Expenses

Costs associated with the physical locations a business operates, including utilities, maintenance, and rent or mortgage payments.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate financial planning.

Activity Variance

Activity variance is the difference between the expected level of activity used to estimate fixed costs and the actual level of activity experienced.

Administrative Expenses

Overhead or general expenses related to the administration of a business, including office salaries, utilities, and legal costs.