Acer 2007 Annual Report Download - page 102

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99
customers.
(iii) Liquidity risk
The Consolidated Companies’ capital and operating funds are sufcient to reimburse all
obligations. Therefore, the Consolidated Companies do not expect to have liquidity risk.
It is considered a remote likelihood that the derivative nancial instruments held by the
Consolidated Companies cannot be reasonably valued by the market and liquidated
quickly. As a result, the Consolidated Companies expect low exposure to liquidity risk.
The available-for-sale nancial assets held by the Consolidated Companies are equity
securities and mutual funds, which are publicly traded and can be liquidated quickly at a
price close to the fair market value. In contrast, the nancial assets carried at cost are not
publicly traded and are exposed to liquidity risk.
The purpose of the Consolidated Companies’ foreign currency forward contracts and
foreign currency options is to hedge the exchange rate risk resulting from assets and
liabilities denominated in foreign currency and cash flows resulting from anticipated
transactions in foreign currency. The lengths of the contracts are in line with the
payment date and the anticipated cash outows of the Consolidated Companies’ assets
and liabilities denominated in foreign currency. As a result, the Consolidated Companies
settle their foreign currency assets and liabilities with contract obligations or rights at the
maturity date and do not expect to have signicant liquidity risk.
(iv) Cash ow risk related to the uctuation of interest rates
The Consolidated Companies’ short-term borrowings and long-term debt carried oating
interest rates. As a result, the effective rate changes along with the fluctuation of the
market interest rates and thereby influences the Consolidated Companies’ future cash
ow. If the market interest rate increases by 1%, cash outows in respect of these interest
payments would increase by approximately NT$221,804 per annum.