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:

Unskilled Workers

Employees who perform jobs that require minimal training or skills.

Supply and Demand

The fundamental economic model that describes how the price and availability of goods and services are determined in a market.

Artificial Price

A price level influenced by external factors such as government intervention, rather than by free market forces.

Imposed Price

A price that is set by an external authority rather than being determined by market forces.