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The following is a hedge effectiveness requirement according to IFRS9 hedge accounting criteria:
-The hedge ratio of the hedging relationship(quantity of hedging instrument vs quantity of hedged item) is the same as “that” resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.
I donot understand this statement. What does it mean by ‘that’ in this circumstance? Please explain more. Thank you!Far too technical 🙂 Stick to our notes
It means that if the hedged item goes up by 8% then the hedging instrument should go down by 8% (more or less)
If you are interested :
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