F6 Leases, Derivatives, Foreign Currency Accounting and Income Taxes Flashcards
1
Q
What derivative can be used to hedge exposure to variability in in cash flows associated with an asset, liability or forecasted transaction.
A
A qualified derivative
2
Q
AOCI
A
Accumulated Other Comprehensive Income
3
Q
Which derivative instrument provides a “downside” protection? A purchase of a put or call option?
A
A purchase of a put option because it allows you to sell at the predetermined strike price.
4
Q
An interest rate swap is used to….
A
used to exchange or swap fixed interest rate cash flows for floating interest rate cash flows. it is a derivative instrument.
5
Q
Purchasing a call option allows the buyer what?
A
Allows the buyer to buy at a set price (strike price) if the asset increases above the strike price.
