3. Amazing Corporation, a U.S. enterprise, sold product to a customer in Wales on October 1,20x1 for 100,000 with payment required on April 1, 20x2. Relevant exchange rates are: Date October 1, 20x1 Spot Rate $1.64 December 31, 20x1 $1.62 April 1, 20x2 $1.67 Forward rate (to 4/1/x2) $1.63 $1.62 The discount factor corresponding to the company's incremental borrowing rate for 3 months is 0.95. SHOW YOUR WORK TO RECEIVE CREDIT A. Assuming that Amazing Corporation does not hedge this transaction, what is the amount of exchange gain or loss that it should show on its December 31, 20x1 income statement? a. Loss $1,000 b. Loss $2,000 c. Gain $1,000 d. Gain $2,000 B. Assume that Amazing Corporation enters a forward contract on October 1, 20x1 to sell 100,000 six months hence, on April 1, 20x2. How should Amazing Corporation report the forward contract on its December 31, 20x1 financial statements? a. Asset $1,950 b. Liability $1,950 c. Asset $1,000 d. Asset $950 e. Liability $950 4. On December 1, 20x1 Pimlico made sales to a customer in India and recorded Accounts Receivable of 10,000,000 rupees. The customer has until March 1, 20x2 to pay. On December 1, 20x1, Pimlico paid $600 for a put option to sell rupees at a strike price of $2.30 per 100 rupees on March 1, 20x2, which was the spot rate on December 1, 20x1. On December 31, 20x1, the spot rate was $2.80 per 100 rupees and the option premium was $0.005 per 100 rupees. A. What is the fair value of the option on December 1, 20x1? a. $0 b. $600 c. $500 d. $10,000 B. What is the fair value of the option on December 31, 20x1? a. $0 b. $600 c. $500 d. $10,000