ADVANCED ACCOUNTING
ADVANCED ACCOUNTING
12th Edition
ISBN: 9780357671221
Author: FISCHER
Publisher: CENGAGE L
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Chapter 9.M, Problem 4.1E
To determine

Option:

It represents a right; to trade some quantity of a particular underlying, whether you may buy it or sell it.

If an option allows buying a functional stock or share, it is said to be a call option.

If an option allows selling a functional stock or share, it is said to be a put option.

Fair value hedge:

A hedge against an asset that has a fixed value that changes according to the supply and demand is known as fair value hedge.

The critical criteria that would be required to justify the classification for fair value hedge.

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