The __________ is a hedge of the exposure to the variability in cash flows that is attributable to a particular risk that is associated with all, or some component of, a recognised asset or liability.
A) fair value hedge
B) hedge of a net investment in a foreign operation
C) cash flow hedge
D) all of the above

Question

Quizplus · Accepted Answer

The definition given in the question corresponds to a cash flow hedge. Fair value hedge refers to hedging the exposure to changes in fair value of a recognised asset or liability, while hedge of a net investment in a foreign operation refers specifically to hedging the exposure to foreign currency risk related to a net investment in a foreign operation. Therefore, the correct choice is C, cash flow hedge.

The __________ Is a Hedge of the Exposure to the Variability