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23. Companies invest in financial derivatives A) to reduce exposure to currency-related risks. B) in order to realize capital gains as their value increases. C)

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23. Companies invest in financial derivatives A) to reduce exposure to currency-related risks. B) in order to realize capital gains as their value increases. C) as a means in which to enter desirable markets. D) None of the above 24. If a company reports a receivable denominated in Euros () and the SUS weakens vis- vis the Euro A) the company will not report the change in the relative value of the receivable unti B) the company will accrue the gain in its financial statements as of the statement dat C) the company will accrue the loss in its financial statements as of the statement date D) the company will recognize the increase in the SUS value of the receivable on its the receivable is collected. even before the receivable is collected. even before the receivable is collected balance sheet as of the statement date, but the unrealized gain will not be recognized in its income statement until the receivable is collected 25. Which of the following statements is true about options? A) Options generally require a large up-front payment. B) The time value of an option reflects the probability that the underlying asset's price will rise. An option's value generally decreases with time to maturity to reflect the time value of money A company might purchase a call option to limit potential price declines in the value of a financial asset or commodity. C) D) 26. Which of the following statements is true? A) Direct computation of the translation adjustment only involves the current year and B) Net income is multiplied by the difference between the end-of-year exchange rate C) Net income is multiplied by the difference between the end-of-year exchange rate D) The cumulative translation adjustment computation contains an adjustment to begins at a zero amount. and the beginning-of-year exchange rate. and the average exchange rate. reflect changes in the fair value of the net assets of the company 27. A highly inflationary economy is best defined as A) one which has a cumulative inflation ofover 100% over a three-year period. B) one in which the rate of inflation is greater than that of the parent company C) one with inflation that is greater than its neighboring countries. D) None of the above

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