All of the Following Are True Statements When Measuring Hedge

question 56

Multiple Choice

All of the following are true statements when measuring hedge effectiveness except:

• A) Effectiveness means there is an approximate offset with the range of 80% to 125% of the changes in the fair value of the cash flows
• B) Effectiveness means there is an approximate offset in fair value to the risk being hedged.
• C) A Company may elect to choose from several different measures for assessing hedge effectiveness.
• D) Effectiveness must be assessed at least annually when the company reports their annual financial statements.

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Definitions:

Innovative Firms

Companies that pioneer new ideas, technologies, or methods, leading to novel products or services and contributing to economic growth and competitiveness.

R&D Spending

Expenditures dedicated to research and development activities with the aim of creating new technologies, products, or processes.

Market Structure

The organizational and other characteristics of a market that influence the behavior of participants and the nature of competition.

Government Patents

Legal rights granted by the government to inventors for their inventions, giving them an exclusive right to use, make, and sell the invention for a certain period.