What types of market risk exposures are addressed by the new disclosure rules?
Answer The rules address risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that affect market risk sensitive instruments. Question 11.What types of assets, liabilities and transactions must be considered for the market risk disclosures? Do the rules address liabilities from issuing insurance contracts or investments accounted for using the equity method? Answer The rules require disclosure about market risk exposures arising from derivative financial instruments, as well as all other financial instruments, and derivative commodity instruments. The term “derivative financial instruments” is defined by generally accepted accounting principles (GAAP). (See, for example, FASB Statement 119.) It includes futures, forwards, swaps, options, and other financial instruments with similar characteristics. “Other financial instruments” also is defined by GAAP. It excludes instruments such as insurance contracts,
