In Which of the Following Situations Is a Gain or Loss

question 30

Multiple Choice

In which of the following situations is a gain or loss recorded on a commitment assets or liability which would not otherwise be recorded?

• A) A speculative forward contract.
• B) A fair value hedge of a firm commitment.
• C) A fair value hedge of a recognized monetary item.
• D)A cash flow hedge of a forecasted transaction.

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Definitions:

Price Elasticity

An indicator that shows the degree to which the demand for a product or service fluctuates following a price adjustment.

Demand Schedule

A table that shows the quantity of a good or service that consumers are willing and able to purchase at various prices over a specific period.

Price Elasticity

Price elasticity measures how the quantity demanded of a good or service changes in response to a change in its price. It signifies the responsiveness of demand to price changes.

Quantity Demanded

Refers to the total amount of a good or service that consumers are willing and able to purchase at a given price in a specified period.