Match the items in the left-hand column with the descriptions/explanations in the right-hand column. Items 1. Put
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Match the items in the left-hand column with the descriptions/explanations in the right-hand column.
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Items 1. Put option 2. Notional amount 8. Intrinsic value 4. Underlying Descriptions/Explanations A. Hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment. B. Hedge of the exposure to variable cash flows of a forecasted transaction. C. Derivative instrument that is part of a host contract. 5. Gains or losses on cash D. flow hedges 5. Foreign currency hedge 7. Fair value hedge B. Call option 9. Effectiveness O. Time value E. Specified interest rate, security price, or other variable. Number of currency units, shares, bushels, or other units specified in the contract in U. S. dollars. F. Recognized in current earnings in the period of the change in value. G. Recognized in other comprehensive income in the period of the change in value. H. value hedges 1. Gains or losses on fair 2. Cash flow hedge Measure of the extent to which the derivative offsets the changes in the fair values or cash flows of the hedged item. I. Hedge of the net investment in foreign operations. J. Conversion of a company's fixed-rate debt to a variable-rate debt. B. Interest rate swap Bifurcation K. Option that provides the right to acquire an underlying at an exercise or strike price. 4. 5. Embedded derivative L. Option that provides the right to sell an underlying at an exercise or strike price. M. Value of an option due to the spread between the current market price of the hedged item and the option' s strike price. N. Value of an option due to the opportunity to exercise the option over the term of the option period. 0. Process of separating the value of an embedded derivative from its host contract.
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Related Book For
Advanced Financial Accounting
ISBN: 9781260165111
12th Edition
Authors: Theodore Christensen, David Cottrell, Cassy Budd
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