| Read 'Chapter 0: Course Material' & answer the following question(s): |
| 1. | A derivative must contain which attributes? |
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| 2. | Derivatives can be either on the balance sheet or off the balance sheet. They include |
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| 3. | Which of the following is the risk that arises from the possibility that future changes in market prices may make a financial instrument less valuable or more onerous? |
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| 4. | Which of the following risks is(are) inherent in an interest-rate swap agreement: I) The risk of exchanging a lower interest rate for a higher interest rate; or II) The risk of nonperformance by the counterparty to the Agreement. |
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| 5. | The FASB's definition of derivatives excludes: |
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| 6. | A company enters into derivative contracts for ___________ purposes. |
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| 7. | The accounting for fair value hedges records the derivative at its |
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| 8. | All of the following statements regarding accounting for derivatives are correct EXCEPT that |
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| 9. | An option to convert a convertible bond into shares of common stock is a(n) |
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| 10. | Disclosure of information about significant concentrations of credit risk is required for |
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| 11. | Gains or losses on cash flow hedges are |
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| 12. | To the extent the hedge is effective, a loss arising from the decrease in fair value of a derivative is included in current earnings if the derivative qualifies and is designated as a |
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| 13. | Which of the following transactions may NOT be eligible for cash flow hedge treatment? |
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| 14. | Under IFRS, companies record unrealized holding gains or losses on cash flow hedges as: |
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| 15. | All of the following are requirements for disclosures related to financial instruments EXCEPT |
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| 16. | For a hedging relationship to qualify as “highly effective,” the change in fair value or cash flows of the hedge must fall between _________ and ____________ of the opposite change in fair value or cash flows of the exposure that is hedged. |
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| 17. | A highly-effective hedge of an existing asset or liability that is reported on the balance sheet would be recorded using |
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| 18. | A fair value hedge differs from a cash flow hedge because a fair value hedge |
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| 19. | When a cash flow hedge is appropriate, the effective portion of the gain or loss on the derivative is |
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| 20. | When preparing their year-end financial statements, the Warner Company includes a footnote regarding their hedging activities during the year. Which of the following is NOT required to be disclosed? |
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