Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk from changes in interest rates and currency exchange rates. We manage our exposure to these risks by monitoring available financing alternatives, through the development and application of credit granting policies, and by entering into derivative arrangements. We do not foresee any significant changes in either our exposure to fluctuations in interest rates or currency rates or how we manage such exposure in the future.
We are exposed to interest rate risk on our floating-rate notes receivable and floating-rate debt. Changes in interest rates also impact the fair value of our fixed-rate notes receivable and the fair value of our fixed-rate long-term debt.
We use derivative instruments, including cash flow hedges, fair value hedges, net investment in non-U.S. operations hedges, and other derivative instruments, as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates and currency exchange rates. As a matter of policy, we only enter into transactions that we believe will be highly effective at offsetting the underlying risk, and we do not use derivatives for trading or speculative purposes. See Note 2 for more information on derivative instruments.
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The following table sets forth the scheduled maturities and the total fair value as of year-end 2022 for our financial instruments that are impacted by market risks:
Maturities by Period
($ in millions) 2023 2024 2025 2026 2027 There-
after Total
Carrying
Amount Total
Fair
Value
Assets - Maturities represent expected principal receipts. Fair values represent assets.
Fixed-rate notes receivable $ 3 $ 17 $ 3 $ 1 $ 1 $ 25 $ 50 $ 45
Average interest rate 1.13 %
Floating-rate notes receivable $ 7 $ 81 $ 15 $ 4 $ 4 $ 1 $ 112 $ 107
Average interest rate 5.73 %
Liabilities - Maturities represent expected principal payments. Fair values represent liabilities.
Fixed-rate debt $ (676) $ — $ (1,301) $ (747) $ (984) $ (4,815) $ (8,523) $ (7,810)
Average interest rate 3.92 %
Floating-rate debt $ — $ (1,402) $ — $ — $ — $ — $ (1,402) $ (1,411)
Average interest rate 5.05 %
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.