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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Definitions:

Honest Communication

The process of openly and sincerely exchanging thoughts, messages, or information, especially in sensitive or critical situations.

Crying

The shedding of tears or welling of tears in the eyes in response to an emotional state, pain, or a physical irritation of the eye.

Normal Behavior

Actions or reactions that are considered typical or expected within a given social or cultural context.

Television Programs

Broadcasted content created for entertainment, education, or information, designed to be viewed on television sets.