Issues on Hedge Effectiveness Testing

The starting point for risk management and hedging lies in understanding a corporation’s exposure to different risks. Hedging is vital for corporate risk management, involving reducing the exposure of the company to particular risks. Hedge effectiveness testing permits firms to assess if they match the timing of the gains and losses of hedged items and their hedging derivatives. In principle, a hedge is highly effective if the changes in fair value or cash flow of the hedged item and the hedging derivative offset each other to a significant extent. This article reviews the concepts of accounting and economic hedging, and presents the requirements for testing the hedge effectiveness.hedge accounting, hedging effectiveness, hedging ineffectiveness, highly effective, effectiveness test

Issues on Hedge Effectiveness Testing

The starting point for risk management and hedging lies in understanding a corporation’s exposure to different risks. Hedging is vital for corporate risk management, involving reducing the exposure of the company to particular risks. Hedge effectiveness testing permits firms to assess if they match the timing of the gains and losses of hedged items and their hedging derivatives. In principle, a hedge is highly effective if the changes in fair value or cash flow of the hedged item and the hedging derivative offset each other to a significant extent. This article reviews the concepts of accounting and economic hedging, and presents the requirements for testing the hedge effectiveness

Issues on Hedge Effectiveness Testing

The starting point for risk management and hedging lies in understanding a corporation’s exposure to different risks. Hedging is vital for corporate risk management, involving reducing the exposure of the company to particular risks. Hedge effectiveness testing permits firms to assess if they match the timing of the gains and losses of hedged items and their hedging derivatives. In principle, a hedge is highly effective if the changes in fair value or cash flow of the hedged item and the hedging derivative offset each other to a significant extent. This article reviews the concepts of accounting and economic hedging, and presents the requirements for testing the hedge effectiveness

ANALYSIS OF THE TAXATION TREND IN THE STATES OF THE EUROPEAN UNION

Taxation has become the key issue of discussions at European level due to the major discrepancies between the states of the European Union. Its analysis is therefore required, especially as most of the anti-crisis measures in the recent years have focused on this field. It should be known better because we should not just look at different indicators and compare them with those of the European Union, we must understand the policies and motivations of the analyzed values in order to learn how to take the most valuable lessons from “the European experience”