Purchase Solution

Classifying Types of Derivatives

Not what you're looking for?

Ask Custom Question

Classification of Derivatives for Accounting

I. Speculative
II. Fair value hedge
III. Cash flow hedge
IV. Foreign currency fair value hedge
V. Foreign currency cash flow hedge
VI. Foreign currency hedge of net investment in foreign operation
VII Not a derivative

Based on the above, what category would each of these fit into:
a. A pasta company is worried about the value of its Italian subsidiary.
b. A hedge fund thinks that the Canadian dollar is overvalued.
c. A diamond importer must make non-dollar payments.
d. A copper fabricator enters into a long-term supply contract.
e. A shipyard desires to fix its floating rate payments.
f. A borrower wants to take advantage of lower floating interest rates.
g. A wine distributor has French franc-denominated zero coupon bonds

Attachments
Purchase this Solution
Solution Summary

This solution discusses the different types of derivatives, defines each, and gives an example of each.

Solution Preview

Classification of Derivatives for Accounting

I. Speculative
II. Fair value hedge
III. Cash flow hedge
IV. Foreign currency fair value hedge
V. Foreign currency cash flow hedge
VI. Foreign currency hedge of net investment in foreign operation
VII Not a derivative

Based on the above, what category would each of these fit into:
a. A pasta company is ...

Purchase this Solution
Free BrainMass Quizzes
MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

View More Free Quizzes
Related BrainMass Solutions

  • Types of alternative investment vehicles and derivatives

    258652 Types of alternative investment vehicles and derivatives 1. What are the different types of alternative investment vehicles? 2. Which one is the most preferable? Why? 3. What are derivatives? 4.

  • Derivative and a derivative securities market

    Derivatives are financial instruments whose value changes in response to the changes in underlying variables. The main types of derivatives are futures, forwards, options, and swaps. The main use of derivatives is to reduce risk for one party.

  • Alternative Investment Vehicles, Derivatives and IRA's

    466435 Alternative Investment Vehicles, Derivatives and IRA's 1.) What are the different types of alternative investment vehicles? Which is preferable and why? What factors could affect the choice of such a vehicle? 2.)

  • Response types to classify findings

    Best of luck!! The solution examines the response types to classify findings.

  • Derivatives as a risk management tool

    These financial instruments are of two types- futures and options.

  • I know very little about derivatives and hedging . Without m

    The most common types of derivatives are definitely options and futures. Swaps are also used extensively in business, but are less common than options and futures. I know very little about derivatives and hedging .

  • Benefits & Pitfalls of Derivatives

    There are three types of derivatives that can beneficial to a company including derivatives for hedging foreign-currency risk, or foreign-exchange risk, hedging Interest-Rate Risk, and Commodity or Product Input Hedges.

  • Classifying types of costs

    459547 Classifying types of costs The following costs were incurred by Osaka Metals Company to maintain the quality of its products. (Yen is the national currency in Japan). 1. Operating an X-ray machine to detect faulty welds, 110,000 yen. 2.

  • Derivatives

    181638 Explain how various types of derivatives, such as futures contracts, can be used as a risk management tool. Explain how various types of derivatives, such as futures contracts, can be used as a risk management tool.

  • Descriptive statistics, sampling methods and classifying types of data

    The solution gives detailed steps on solving various statistical questions such as descriptive statistics, sampling method and classifying types of data. All concepts are explained.

View More Related Solutions