A hedge of the exposure to changes in the fair market value of an existing asset or liability or a firm commitment is a/an
A)fair value hedge.
B)cash flow hedge.
C)foreign currency exposure hedge.
D)marked-to-market hedge.

Question

Quizplus · Accepted Answer

A fair value hedge is used to hedge the exposure to changes in the fair market value of an existing asset or liability or a firm commitment. It is designed to offset changes in the fair value of the hedged item with corresponding changes in the fair value of the hedge instrument.

A Hedge of the Exposure to Changes in the Fair