Hedge effectiveness must be documented before a particular hedge qualifies for hedge accounting. Describe the most common approaches used to determine hedge

Q: Explain what a “riskless hedge” is and how the riskless hedge concept is used in theBlack–Scholes…

A: Riskless hedging: It is the process of buying the stock as well as sell call options simultaneously…

Q: Trade, Debt and Equity are types of securities that are being considered when investing, which…

A: Investors can invest in different securities such as equity, debenture, Preference shares,…

Q: What are the Derivative Securities? Elaborate in detail the different types and transactions of…

A: Derivative Contracts are used by parties to earn profit by executing a transaction at a favorable…

Q: Explain why yields, investment objectives, risk profiles, knowledge, and timing the market serve as…

A: Bonds are the financial instruments that represent promises from a borrower to a lender of paying…

Q: Explain how alternative investments can act as a hedge against inflation.

A: Alternative Investments:  Stocks, bonds are financial instruments that fall under the category of a…

Q: What is a bond sinking fund? What is the purpose of establishing a sinking fund? Are bonds that…

A: A bond sinking fund is the total amount of cash kept in a fund that will be used to retire a bond…

Q: What is Asset allocation:          A)   choosing which securities to hold based on their valuation.…

A: Investment strategy is referred as a guide to the investors at the time of investment decision…

Q: How are changes in the fair value of an option accounted for in a cash flow hedge? In a fair value…

A: Cash flow hedge: Cash flow hedge is the process of reducing or eliminating the risk of charges in…

Q: State the purposes for which the securities premium reserve can be utilised.

A: Securities premium:Securities premium is the gain earned by the company, by issuing a share of a…

Q: Describe the Sale of Trading Security Investments.

A: Trading security investments: It refers to the trading of such investment that is done by the…

Q: Identify the major derivative securities used to hedge against risk.

A: Answer: Usually, the primary aim of derivative securities trading is to hedge risk against the…

Q: For accounting purposes, what type of hedge is the forward contract? a. A cash flow hedge b. A…

A: A forward contract is a contract between the two parties in which both parties agrees to exchange…

Q: A bond investment that satisfy the amortized cost measurement may be designated a. irrevocably at…

A: As per IFRS 9 "Financial Instruments" classification to amortized cost is permissible for debt…

Q: uate the impact of agency costs on a firm’s selection of bond and eq

A: Step 1  The agency theory in corporate finance aims to describe and evaluate the behavior of…

Q: Are securities that provide for a sinking fund regarded as beingriskier than those without this type…

A: Introduction: A sinking fund is nothing but a set up by an economic institution by setting aside…

Q: Where are debt investments classed as trading securities, available-for-sale securities, and…

A: Secured debt obligations: The borrowed money must be returned and has a specified amount, maturity…

Q: On a balance sheet, what valuation must be reported for short-term debt investments in trading…

A: Short term debt investments are those debt funds or mutual funds that are obtained for a short…

Q: A hedger locks in a price with the final outcome of that hedge determined by the final basis. A.…

A: A hedger is a person who fixed his final outcome using the future and forward prices. The basis is…

Q: Explain the principle of immunization when used with a bond portfolio. What is bond portfolio…

A: Hey, since there are multiple subparts questions posted, we will answer first three question. If you…

Q: Derivative

A: Fair Value hedge Vs. Cash Flow hedge     A hedge is a financial instrument that mitigates risk.…

Q: Which one of the following securities is collateralized (secured) by specific assets? debenture…

A: Mortgage bond is collateralized (secured) by specific assets.

Q: Determine appropriate hedging and risk management strategies using a mix of underlying and…

A: Derivatives are financial instruments whose values are derived from other assets such as stocks,…

Q: Requirements (a) Explain if a hedge exists; if so the type of hedge, hedging instrument and hedged…

A: Hedging is a type of instrument that protects investors from foreign exchange fluctuation. Hedging…

Q: In discussing how to value and report investment securities, your text also talks about trading…

A: Investment in securities made by the management for the objective of utilizing their idle cash in…

Q: iscuss  the inherent risks of Madoff Investment Securities

A: Madoff Investment Securities was run by Bernard Madoff. In fact it was one of the largest Ponzi…

Q: What is the purpose of a fair value hedge?

A:

Q: Explain the principle of immunization when used with a bond portfolio. a. What is bond portfolio…

A: Hey, since there are multiple subparts questions posted, we will answer first three question. If you…

Q: Define debt securities and equity securities.  Include their similarities and differences in your…

A: Introduction: Securities: Securities are the financial instruments that are used for the purpose of…

Q: Explain the use of a sinking-fund provision. How can it reduce the investor’s risk?  What are…

A: 1.  Sinking funds adds an element of safety for corporate bond issue to investors. Sinking fund…

Q: Describe Derivatives Used to Hedge Risk.

A: Definition:   Derivatives: The contract whose value derives from the fluctuation of values of the…

Q: (c) Explain how to test hedge effectiveness under MFRS 9 and it accounting treatment in hedge…

A: Hedge accounting refers to the technique which modifies the normal basis or grounds for recognising…

Q: Define Held for trading investments

A: Investment is an asset that is being purchased expecting that its value will increase with time.…

Q: Trading bond investment are reported at

A: Investments held for trade are recorded at Fair value and their fair value is assessed and adjusted…

Q: Short-term investments are also called marketable securities. True or False True False

A: Marketable securities are those assets or securities which can be readily converted into cash. These…

Q: Should gains and losses on a fair value hedge be recorded as they occur, or should they be recorded…

A: Answer: Fair value hedge: The loss or gain on a fair value hedge should be recorded with the item…