Question
When must an embedded derivative be bifurcated from its host contract?
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Answer
When it is not clearly and closely related and meets the derivative definition.
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Question
Why is a receive-floating, pay-fixed swap used on variable-rate debt?
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Answer
It locks in a fixed borrowing cost.
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Question
What happens if hedge accounting is not designated?
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Answer
Derivative fair-value changes go to net income.
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