This paper explains the concepts of underhedging and overhedging in interest rate swaps and demonstrates how overhedged and underhedged swaps might be accounted for under Statement of Financial Accounting Standards No. 133 (FAS 133) and international Accounting Standard No. 39. To illustrate, we...

There are two basic learning curve time and cost models that are somewhat confusing, because the same learning rate (e.g. the 80% learning curve) yields different results. The cumulative average model applies the learning rate to average variable cost, whereas the incremental model applies it to...