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- Fair Value Measurement Concept Question: What does it mean when fair value is paid to transfer a liability in an orderly transaction between market participants at the measurement date? Please explain or give an example for understanding.What are the differences in accounting for a forward contract used as (a) a cash flow hedge and (b) a fair value hedge of a foreign currency denominated asset or liability?Exchange rate risk is irrelevant because investors can hedge exchange rate risk on their own. Comment on this preposition.
- If the value of contractual transactions is affected by exchange rate fluctuations, most likely the firm has the ______ exposure. A. economic B. country risk C. transaction D. translationInternational accounting standards differ from U.S. Generally Accepted Accounting Principles in that International standards Select one: a. state that firm sale or purchase commitments may not be treated as a hedged transaction. b. permit firm sale or purchase commitments to be accounted for as either fair value hedges or cash flow hedges. c. require that firm sale or purchase commitments are accounted for as fair value hedges. d. require that firm sale or purchase commitments are accounted for as cash flow hedges.Which of the following might discourage covered interest arbitrage even if interest rate parity does not exist? A. transaction costs. B. political risk. C. differential tax laws. D. all of the above. E. none of the above.
- If an exchange lacks commercial substance, and no cash is received, a company should: a. Defer Gain b. Recognize Loss c. Both d. Neither1. the non-arbitrage conditons holds if: A: if no one conducts arbitrage at all B: exactly because everyone wants to arbitrage C: only if no one wants to arbitrageA company has invested in a financial instrument and is trying to determine whether or not it is a derivative. Which of the following is not a requirement for reporting a financial instrument a derivative? Multiple Choice There must be a notional amount The amount invested must be material. There must be at least one underlying The contract may be settled on a net besis. Un
- which of the following is correct regarding the sale or exchange of virtual currency: A. no gain or loss is recognized on any exchange of virtual currency B. The sale of virtual currency is always recognized as a long term capital gainWould you prefer using negotiable instruments as a form of payment rather than using traditional legal tender?When preparing an income statement, which of the following items would most likely be classified as other comprehensive income? A. A foreign currency translation adjustment B. An unrealized gain on a security held for trading purposes C. A realized gain on a derivative contract not accounted for as a hedge D. None of the above