
INTERMEDIATE ACCOUNTING WITH AIR FRANCE-KLM 2013 ANNUAL REPORT
8th Edition
ISBN: 9781259546235
Author: J. David Spiceland, James Sepe, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Question
Chapter A, Problem A.1Q
To determine
Financial instrument: A financial instrument can be cash, or a share of ownership (stock investments), or a contractual obligation to deliver (accounts payable) or receive cash (
To explain: The reason for financial instruments being called as derivatives
Expert Solution & Answer

Explanation of Solution
Some financial instruments are meant for managing risk in the financial markets. These financial instruments exist to safeguard against the risk created by other financial instruments. Some examples of such financial instruments are forward contracts, interest rate swaps, futures, and options. These financial instruments derive the values from the future value of underlying security or index. Hence, some financial instruments are called as derivatives.
Conclusion
Since some financial instruments derive the values from the future value of underlying security or index, they are called as derivatives.
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INTERMEDIATE ACCOUNTING WITH AIR FRANCE-KLM 2013 ANNUAL REPORT
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