- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 3. Derivative Benefits, Risks, and Issuer and Investor Uses
- Subject 2. Issuer and Investor Use of Derivatives
CFA Practice Question
A derivative used to offset the fluctuation in fair value of an asset or liability is an example of:
B. Fair Value Hedge
C. Net Investment Hedge
A. Cash Flow Hedge
B. Fair Value Hedge
C. Net Investment Hedge
Correct Answer: B
A fair value hedge is used to offset the fluctuation in fair value of an asset or liability.
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