Mod 19 Wrong Answers Flashcards
Economic characteristics and risks of the embedded instrument are not clearly and closely…
Related to those of host contract
Hybrid instrument is not recorded…
At fair value
An embedded derivative must meet the definition of…
A derivative instrument
Hedge accounting is permitted for what 4 types of hedges?
1 unrecognized firm commitments
2 available for sale securities
3 foreign currency denominated hedge forecasted transactions
4 net investments in foreign operations
What are the 2 general criteria for a hedging instrument?
1 sufficient documentation must be provided at beginning of
Process
2 hedge must be highly effective throughout its life
4 foreign currency hedges
1 unrecognized firm commitment
2 available for sale security
3 foreign currency denominated forecasted transaction
4 net investment in foreign operations
Hedge of a recognized asset or liability is…
A fair value hedge or cash flow hedge
3 disclosures required about credit risk for financial instruments with off balance sheet credit risk
1 amount of accounting loss entity would incur should any
Party to financial instrument fail to perform
2 class of financial instruments held
3 categorization btw/ instruments held for trading purposes and
Purposes other than trading
Concentrations of credit risk exist when an entity has…
A business activity, economic characteristic or location that is
Common to most of its financial instruments
Disclosure of information about significant concentrations of credit risk for…
All financial instruments is required
Forward contract
Agreement between 2 parties to buy and sell specific quantity
Of commodity, foreign currency or financial instrument
At agreed upon price with delivery or settlement at designated
Future date
Futures contract
Forward based contract to make or take delivery of a designated
Financial instrument, foreign currency or commodity
During a designated period at a specified price or yield
Futures contracts frequently have provisions for…
Cash settlement
