A hedge of the exposure to changes in the fair market value of an existing asset or liability or a firm commitment is a fair value hedge.

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A fair value hedge is a type of hedge that is used to offset changes in the fair market value of an existing asset or liability or a firm commitment. This hedge is designed to provide protection against potential losses that may occur due to changes in the market value of the asset or liability. The purpose of this hedge is to ensure that the value of the asset or liability remains stable, regardless of changes in the market. Typically, a fair value hedge is accomplished by using a derivative instrument, such as a futures contract or an option, to offset the changes in the market value of the asset or liability.

A Hedge of the Exposure to Changes in the Fair