If a company does not use derivatives, are quantitative disclosures of market risk required?
Answer A company that does not use derivatives may have material exposures to market risks from non-derivative financial instruments that must be disclosed under the new rule. For example, a company that borrowed amounts in a currency different from its functional currency has a risk exposure requiring disclosure if reasonably possible changes in exchange rates or interest rates would be material. Question 24.The release encourages quantitative disclosures about market risk inherent in positions and contracts outside the scope of the rule. What types of disclosures may be useful to investors? How may these elective disclosures be presented? Answer Companies are encouraged to provide quantitative disclosures that include the market risks in commodity positions, anticipated transactions, and derivative commodity instruments. Companies selecting the sensitivity analysis or value at risk disclosure approaches are not required to provide separate market risk information for instruments, pos
Related Questions
- How does a company determine whether its market risk exposures are material enough to require the quantitative and qualitative disclosures specified by the new rules?
- When must companies begin furnishing the quantitative and qualitative disclosures of market risk?
- If a company does not use derivatives, are quantitative disclosures of market risk required?
