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To the Extent That a Fair Value Hedge Is Effective

question 23

Essay

To the extent that a fair value hedge is effective in serving its purpose, the gain or loss on the derivative will be offset by the loss or gain on the item being hedged. Explain.


Definitions:

Sampled Population

The population from which the sample is taken.

Targeted Population

A group of individuals sharing one or several characteristics that a study is designed to analyze.

Standard Error

A statistical measure that estimates the accuracy with which a sample distribution represents a population by using the standard deviation.

Sampling Error

The difference between a population parameter and a sample statistic that results from selecting a sample.

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