Which of the Following Is/aretrue Regarding the Fair Value Option

question 111

Multiple Choice

Which of the following is/aretrue regarding the fair value option for marketable securities and derivatives?

• A)Subsequent to the acquisition of a derivative, the firm may report changes in fair value of derivatives in Other Comprehensive Income.
• B)Subsequent to the acquisition of a derivative, the firm may report changes in fair value of derivatives, but they have no effect on any lines of the statement of cash flows.
• C)Firms using the fair value option mark the carrying value of the asset to fair value each period.
• D)If the change in fair value of the derivative decreases carrying value, then the firm reports the amount of that decrease as a loss during the current period.
• E)all of the above

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Definitions:

Aversive Stimulus

A stimulus that is unpleasant or noxious and that an organism seeks to avoid or escape.

Low-Probability Behavior

A behavior that is unlikely to be performed often, usually due to a lack of reinforcement or inherent appeal.

High-Probability Behavior

An action or activity that has a strong likelihood of being performed or occurring under certain conditions, often used in the context of behavioral analysis or prediction.

Mowrer

O.H. Mowrer, an influential psychologist known for his two-factor theory of learning which combines classical and operant conditioning.