Fair value hedge definition
/What is a Fair Value Hedge?
A fair value hedge is a hedge of the exposure to changes in the fair value of an asset or liability. It is used to minimize fluctuations in earnings caused by changes in fair values. You would typically use a derivative or some other type of financial instrument to enter into a fair value hedge. Any subsequent changes in the fair value of this hedging instrument should offset the fair value changes of the item being hedged.