Compare/contrast hedge transactions with gambling.

Compare/contrast hedge transactions with gambling.

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Compare/contrast hedge transactions with gambling

INSTRUCTIONS:

Please show each question 1. Compare/contrast hedge transactions with gambling. 2. Discuss contingencies and how they are reported on financial statements. What conditions must be met before a contingency can be charged against income? 3. For contingencies, what is important about the disclosure of financial activity versus the recognition of the financial activity?

CONTENT:
Discussion QuestionsStudent:Professor:Course title:Date:Discussion QuestionsHedging essentially involves taking an offsetting position in a derivative so as to balance any losses and gains to the underlying asset. It is notable that hedging tries to eradicate the volatility that is associated with the price of an asset by taking counterweighing positions in contrast to what the investor has at present. Hedging is a type of derivative transaction that avoids considerable losses. Gambling and hedging contracts/transactions can be put on the same spectrum. Both of them are contracts that somehow allow individuals to avoid loss or make profits from spending future uncertainties. Some contracts, for instance wagering, are known as gambling. Some transactions, for instance insurance, may serve some genuine, valid purposes and ...
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