A Forward Contract May Be Used for Which of the Following

question 34

Multiple Choice

A forward contract may be used for which of the following?
1) A fair value hedge of an asset.
2) A cash flow hedge of an asset.
3) A fair value hedge of a liability.
4) A cash flow hedge of a liability.

• A) 1 and 3
• B) 2 and 4
• C) 1 and 2
• D) 1, 3, and 4
• E) 1, 2, 3, and 4

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Definitions:

Aggregate

A total or whole made up of distinct elements or individuals gathered together.

Morality

A system of values and principles concerning the distinction between right and wrong or good and bad behavior.

Formation

The process of coming into existence or the act of creating or developing something.

Entitativity

The extent to which a group is perceived as a cohesive and singular entity, distinguished by the uniformity and interdependence of its members.