Under ASC 815, a derivative instrument is designated as a hedge if

Under ASC 815, a derivative instrument is designated as a hedge if

Under ASC 815, a derivative instrument is designated as a hedge if:

A. It is used for speculative purposes

B. It is used to reduce risk exposure

C. It has a positive fair value

D. It is traded on a public exchange

Answer: B

Explanation: ASC 815-20-20-1: Hedges are used to reduce risk (e.g., interest rate, currency risk). Speculative derivatives are not hedges.