Most large firms use derivative financial instruments to hedge their market risks. Required a. To obtain the
Question:
Most large firms use derivative financial instruments to hedge their market risks.
Required
a. To obtain the benefits of hedge accounting for a derivative instrument under IFRS 9, the firm must designate the instrument as a hedge. What are the requirements for designation?
b. How are derivatives valued under IFRS 9?
c. What are the benefits to the firm of hedge accounting?
Step by Step Answer:
a Requirements for designation Management must document the nature of the risk being hedged and iden...View the full answer
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A money market hedge is a technique used to lock in the value of a foreign currency transaction in a company\'s domestic currency. Therefore, a money market hedge can help a domestic company reduce its exchange rate or currency risk when conducting business transactions with a foreign company.
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