Hedge effectiveness: Difference between revisions
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* [[IAS 39]] | * [[IAS 39]] | ||
Revision as of 09:39, 13 September 2017
The degree to which changes in the fair value or cash flows of a hedged item that are attributable to the hedged risk are offset by changes in the fair value or cash flows of the related hedging instrument.
In a situation where a hedge is ineffective (or inefficient) the ineffectiveness may arise from:
- Basis risk or basis differences; or
- Differences between the quantum of (i) the hedged item and (ii) the hedging instrument.
Also known as Hedge efficiency.
