If SMC uses a forward contract to hedge the payable, what is the overall transaction gain or
Question:
If SMC uses a forward contract to hedge the payable, what is the overall transaction gain or loss on the company from using the hedge?
a. $2,000 gain
b. $1,500 loss
c. $1,500 gain
d. $2,000 loss
e. $500 gain
On December 1, 2009, SMC entered into a transaction to import raw materials from a foreign country. The account is to be settled on March 1 with the payment of 50,000 euros. The spot rates and the forward rates on various dates are as follows:
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