MCQ 3.54.87-WHAT METHOD DETERMINES CARRYINGVALUES FOR OFF-MARKET SWAPS IN HEDGEACCOUNTING?(1) PRESENT VALUE OF DIFFERENTIAL(2) HISTORICAL COST ONLY(3) MARK TO MARKET DAILY(4) NOMINAL AMOUNT BASIS

In hedge accounting, the carrying values of off-market swaps are typically determined using the…

Answered: 3.54.87-WHAT METHOD DETERMINES CARRYING…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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which is correct?
Why might a company become involved in an interestrate swap contract to receive fixed interest payments andpay variable?
Imagine that the table above outlines deposits rates. Assuming A wants a fixed rate deposit and B wants a floating rate deposit, design the swap that would split the net gain in proportion 3:1 between A and B (A=3 : B=1).
?
8 When considering counterparty credit risk, which of the following financial products has the largest outstanding notional amount in the marketplace A. Credit default swaps. B. Foreign exchange forwards. C. Interest rate swaps. D. Repos and reverse repos
A swap contract Select one: A. relates to the trading of an asset owned by one company for another owned by a second company. B. is an arrangement between two or more parties to exchange future cash flows. C. can be used to increase or decrease the ratio of fixed and variable interest costs in its cost structure. D. Both B and C are true.
Provide Answer
am. 112.
Match the vocabulary below with the following statements. • organized market,• maintenance margin,• standardized contract,• margin call• standardized expiration,• variation margin,• clearing corporation,• open interest,• daily recontracting• interest rate risk• marking to market• cross-hedge• convergence• delta-hedge• settlement price• delta-cross-hedge• default risk of a future• ruin risk• initial margin(a) Daily payment of the change in a forward or futures price.(b) The collateral deposited as a guarantee when a futures position is opened.(c) Daily payment of the discounted change in a forward price.(d) The minimum level of collateral on deposit as a guarantee for a futures position.(e) A hedge on a currency for which no futures contracts exist and for an expiration otherthan what the buyer or seller of the contract desires.(f) An additional deposit of collateral for a margin account that has fallen below itsmaintenance level.(g) A contract for a standardized number of units of a…
The variability in return on security due to changes in the level of interest rate in market is called as: a.Interest Risk b.Financial risk c.Call Risk d.Liquidity Risk
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3.54.87-WHAT METHOD DETERMINES CARRYING VALUES FOR OFF-MARKET SWAPS IN HEDGE ACCOUNTING? (1) PRESENT VALUE OF DIFFERENTIAL (2) HISTORICAL COST ONLY (3) MARK TO MARKET DAILY (4) NOMINAL AMOUNT BASIS