a. 1. Roberts has a 50,000 foreign currency payable due in 90 days. What is the appropriate action for Roberts to take today if it wishes to hedge its foreign exchange exposure. enter into an FX forward today that will mature in 90 days, buying foreign currency and selling US dollars b. enter into an FX forward today that will mature in 90 days, buying US dollars and selling foreign currency. c. buy an FX option today that will give Roberts the right but not the obligation to sell 50,000 foreign currency and buy US dollars in 90 days. d. enter into an FX spot contract today, purchasing US dollars and selling foreign currency e. sell an FX option today to a Bank giving the Bank the right but not the obligation to sell to Roberts 50,000 foreign currency and buy US dollars in 90 days 2. Which statement is incorrect regarding fair value hedges and cash flow hedges of an asset or liability. a. results of a fair value hedge are reported in the income statement b. results of a cash flow hedge are reported in Other Comprehensive Income c. under a cash flow hedge the difference between the gain or loss on the hedge and the gain or loss on the item being hedged is reported in Other Comprehensive Income d. under a cash flow hedge the difference between the gain or loss on the hedge and the gain or loss on the item being hedged is reported in the income statement e. under a fair value hedge the difference between the gain or loss on the hedge and the gain or loss on the item being hedged is reported in the income statement 3. Top, a US Company, has a 100% owned subsidiary in Japan. The functional currency for the subsidiary is the Japanese yen. The subsidiary purchases merchandise on credit from a German company, with payment due in US dollars. Between the date of sale and the due date of the payable, the yen strengthens against the US dollar. What will be the result to Top a. there will be a foreign exchange gain b. there will be a foreign exchange loss c. there will be no foreign exchange gain or loss d. there will be both a foreign exchange gain and loss e. there will be a bad debt expense to the German company