What Is the Primary Difference Between a Cash Flow Hedge

question 18

Multiple Choice

What is the primary difference between a cash flow hedge and a fair value hedge?

• A) The fair value hedge must completely offset the variability in the cash flow from the foreign currency receivable or payable.
• B) The cash flow hedge can only be used to offset potential foreign currency losses on accounts receivable.
• C) The cash flow hedge must completely offset the variability in cash flow from the foreign currency receivable or payable.
• D) The fair value hedge can only be used to offset the variability in cash flow from long-term fixed assets related to foreign currency fluctuations.

---

Definitions:

First Draft

An initial version of a document or piece of work, often undergoing significant revisions or edits.

Proofreading Strategies

Techniques and methods used to carefully review and correct written material to ensure accuracy in grammar, spelling, punctuation, and formatting before finalizing the text.

Bottoms Up Proofreading Technique

A method of proofreading that involves starting from the end of a document and working backwards, reading each sentence in isolation to catch errors.

Personal Error Patterns Chart

A tool used to identify and analyze recurring mistakes in an individual's work or behavior, aiming to improve performance or behavior.