Designating one or more hedging instruments so that it offset the change in fair value or change in cash flows of hedged items is called hedge accounting. Rules in IAS 39 are complex and strict.Thus, many companies could apply hedge accounting and prepare two financial statements (one with meeting IAS ... Read More

In hedge accounting, the fair value of derivative entries are adjusted and includes the value of opposing hedge for security (or) hedge accounting modifies the standard method of recognition of gains/losses on security and hedging instruments used to hedge position.In the same accounting period Position being hedged and the hedge ... Read More

Fair value is used in the valuation of an asset and is the value at which an asset is exchanged between the parties. In other words, the fair value is the transaction amount paid between parties in the open market. It is also used in stock or share price.Market value ... Read More

Let us learn about mutual funds and exchange traded funds before understanding the differences between them.Exchange traded fundsIt is a fund which is traded on the stock exchange. Stocks and bonds come under exchanged traded funds. Price in the exchange traded funds varies throughout the day. Generally, fees in exchange ... Read More

Cash flow risk is defined as the variability of cash flows for an existing asset or liability of future transactions due to particular risk. Cash flow hedges protect margins, revenues and expenses of companies from foreign exchange riskFacts to know about cash flow hedges are as follows −To receive special ... Read More

Cash flow hedge is an investment method used to control and mitigate any sudden change in either cash inflow or cash outflow of an asset/liability/forecasted transaction. Sudden change is due to various reasons like change in interest rate, change in prices, fluctuations in foreign exchange rates. Transaction with another party ... Read More

It is an investment position taken by an investor or by a company to protect fair value of their specific asset/liability/unrecognised commitment from risk which can affect their profit and loss account.In other words, it is a derivative instrument to balance their risk in other investments to offset potential losses ... Read More

People have different goals in terms of investments, some will go for financial securities and some may go for extra income and others may save for retirements etc. to reach their goals people invest in different options like hedge funds, Exchange traded funds, bonds etc.In this, we will compare hedge ... Read More

Private equity term is used when investors use their funds for acquisition of public entities or in investment in private companies whereas hedge funds are privately owned entities that used to raise funds from investors and invest them back in financial instruments.Private equity funds are used in company acquisition, expansion ... Read More

Investment is nothing but investors hold the asset or security for a long period of time whereas speculation is for profit making and used usually for a shorter period of time.In other words investments assure amount safety and good returns whereas speculation is opposite to investment that means amount safety ... Read More