A Hedge to Avoid the Potential Unfavorable Effects of Changing

question 58

Multiple Choice

A hedge to avoid the potential unfavorable effects of changing prices associated with all of the following would qualify for special fair value hedge accounting except:

• A)debt instruments held in a trading portfolio.
• B)​equity and debt instruments held in an available-for-sale portfolio.
• C)​a firm commitment to acquire crude oil.
• D)​a farmer's inventory of hogs.

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Definitions:

Service Industries

Sectors of the economy that provide intangible products or services such as healthcare, banking, and education.

Manufacturing Industries

Manufacturing industries involve the production of goods in large quantities using raw materials and machines, contributing significantly to economic development.

Collective Bargaining Agreements

Legal contracts between employers and a group of employees aimed at establishing wages, working conditions, benefits, and other aspects of workers' compensation and rights for a specified period.

Fringe Benefits

Additional benefits supplementing an employee's salary, such as health insurance, pensions, and paid vacations.