Introduction to Hedge Accounting & Fair Value Hedge Accounting

For hedge accounting is it necessary that there should be relationship between hedged item and hedging instrument?

• True

• False

Objective of Hedging is to ?

• Reduce Risk

• Make Profit

• Both

• None of the Above

How many types of hedge accounting are prescribed in IND AS 109 ?

• 1

• 2

• 3

• 4

A Fair Value hedge is a hedge of the exposure to changes in fair value of hedged item?

• True

• False

If one Old trader passes off his position to a New Trader, Open Interest will…

•    Increase by 1

•      No Change

•      Decrease by 1

•    Increase by 2

Investor who loves to take risk opt. for …..

• Speculation

• Gambling

• Hedging

• None

Q- Is hedge accounting mandatory or optional ??

• Mandatory

• Optional

Which of the following is true for Hedge effectiveness requirement?

(i)- Economic relationship should exist between the hedged item and the hedging instrument.

(ii)- Effect of credit risk should not dominate the hedge.

(iii)- Hedge ratio for accounting purposes should be the same as actually deployed by the entity.

• (i) only

• onlyboth (i) and (ii)

• both (i) and (iii)

• (i), (ii) and (iii)

…………. established at the highest level at which an entity determines how it manages its risk

• Risk Management Strategy

• A)      Risk Management Objective

‘Usually’ A hedging instrument is ?

• Derivative

• Non derivative

• Either of above

• None of the above