Derivatives are used for risk exposure

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Reference no: EM132061233

Interpreting Trend of Derivative

The following derivatives are used for risk exposure.

1) The net fair value of foreign exchange forward contracts (including adjustments for credit risk), as of December 31, 2015, was an asset of $637 million compared with a liability of $31 million as of December 31, 2016 The potential decrease in fair value from a 10% adverse change in the underlying exchange rates, in U.S. dollar terms, would have been $2.6 billion at December 31, 2015, compared with $2.7 billion at December 31, 2016.

First and foremost, what does it mean in plain english?

What does this statement reveal about the trend of the derivative.

Is it positive or negative?

How can it be interpreted?

2) The net fair value of Alliance derivative financial instruments at December 31, 2015 was an asset of $637 million, compared to an asset of $523 million at December 31, 2016.

Is this positive or negative?

Reference no: EM132061233

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