An Advantage of a Fair Value Hedge Is That

Multiple Choice

An advantage of a fair value hedge is that:

A) ​gains or losses on the derivative hedging instrument and the offsetting gains or losses on the hedged items are both recognized currently in earnings.
B) ​gains or losses on hedges of firm commitments are reported in other comprehensive income because the anticipated cash flows have not been recognized in earnings.
C) ​documentation is not necessary for fair value hedges.
D) ​a bank may use a fair value hedge to hedge the risk that a customer's loan will be prepaid.