Identify whether each of the following derivatives provides a fair value hedge or a cash flow hedge
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Identify whether each of the following derivatives provides a fair value hedge or a cash flow hedge if it is used as a hedging instrument.
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Item a. A forward contract to buy US$1 million for C$1.05 million. b. A swap of investment with a variable interest rate with one providing a fixed return. c. A swap of a foreign-denominated bond payable for one denominated in Canadian dollars. d. A futures contract to sell 10,000 ounces of gold at US$1,150/ ounce. Fair value hedge or cash flow hedge?
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a Fair Value Hedge A forward contract to buy US1 million for C105 million is a fair value hedge This ...View the full answer
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