PSH-Annual-Report

Annual Report December 31, 2014Notes to Financial Statements (continued)6. FINANCIAL ASSETS AND FINANCIAL LIABILITIES AT FAIR VALUE THROUGHPROFIT AND LOSS (continued)Net changes in fair value of financial assets and financial liabilities through profit or loss2014 2013Realized UnrealizedTotalGains/(Losses) Realized UnrealizedTotalGains/(Losses)Financial assetsDesignated at fair valuethrough profit or loss $ 331,650,197 $ 874,589,851 $ 1,206,240,048 $ 55,413,225 $ 419,166,161 $ 474,579,386Financial liabilitiesDesignated at fair valuethrough profit or loss (25,742,443) 146,535,392 120,792,949 (145,053,646) (77,919,192) (222,972,838)Derivative financialinstruments 38,859,476 31,184,630 70,044,106 10,006,708 25,791,113 35,797,821Net changes in fair value $ 344,767,230 $1,052,309,873 $1,397,077,103 $ (79,633,713) $ 367,038,082 $ 287,404,3697. FAIR VALUE OF ASSETS ANDLIABILITIESFair Value HierarchyIFRS 13 requires disclosures relating to fair valuemeasurements using a three-level fair valuehierarchy. The level within which the fair valuemeasurement is categorized is determined on thebasis of the lowest level input that is significant tothe fair value measurement. Assessing thesignificance of a particular input requires judgmentand considers factors specific to the asset orliability. Financial instruments are recognized at fairvalue and categorized in the following table basedon:Level 1 – Inputs are unadjusted quoted pricesin active markets at the measurement date.The assets and liabilities in this category willgenerally include equities listed in activemarkets, treasuries (on the run) and listedoptions.Level 2 – Inputs (other than quoted pricesincluded in Level 1) are obtained directly orindirectly from observable market data at themeasurement date. The assets and liabilities inthis category will generally include fixedincome securities, OTC options, total returnswaps, credit default swaps, foreign currencyforward contracts and certain other derivatives.Also, included in this category are theCompany’s investments in affiliated entitiesvalued at the net asset value, which can beredeemed by the Company as of themeasurement date, or within 90 days of themeasurement date.Level 3 – Inputs reflect the Company’s bestestimate of what market participants would usein pricing the assets and liabilities at themeasurement date. The assets and liabilities inthis category will generally include privateinvestments and certain other derivatives.52 PERSHING SQUARE HOLDINGS, LTD.