CERTYNEX IFRS ACADEMY

An instrument is measured from a Level 2 price, which represents most of its value, and a Level 3 volatility that the valuer judges significant to the measurement (case judgement). Which of these analyses of the classification is wrong?

The measurement is classified in Level 2, since the Level 2 input represents most of the instrument's value.

Since the volatility is a significant Level 3 input, the measurement is classified in Level 3.

The measurement is classified in its entirety at the level of the lowest-level input that is significant to it.

Whether the volatility is significant is a matter of judgement and takes account of factors specific to the instrument.