Identify which of the following embedded derivatives must be separated from the relevant host contract. In each case, state also how the host contract and the embedded derivative should be measured in the books of the holder. Assume that the host instrument is not measured at fair value through profit or loss.
(a) An equity conversion feature embedded in a convertible debt instrument
(b) An embedded derivative in an interest-bearing host debt instrument, where the embedded derivative derives its value from an underlying interest rate index and can change the amount of interest that would otherwise be paid on the host debt instrument
(c) An embedded cap (upper limit) on the interest rate on a host debt instrument, where the cap is at or above the market rate of interest when the debt instrument is issued
(d) As in part (c), except that the cap is below the market rate of interest