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Need answer to these questions and explanation thanks! 1. Match each of the following terms to the conect denition. A. Spot rate: Forward Rate: .

Need answer to these questions and explanation thanks!

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1. Match each of the following terms to the conect denition. A. Spot rate: Forward Rate: . Stn'ke Pn'ce: . Put Option: |Oall Option: WED?\" F. Optimum Premium: OPTIONS [E]: The option the sell currency in the future at a specified rate, the purchase price of an option contract, E option the buy currency in the future at a specified rate, the current exchange rate. the rate at which a forward contract will be executed, the rate at which an option contract will be executed 2. When recording a cash ow hedge of a forward contract of a foreign currency-denominated asset, how is the discount on the contract treated? A. All at once at the beginning of the hedge period El. Amortized equally overtime as a foreign exchange loss in net income. with an offsetting credit to sales C. Amortized equally overtime as a foreign exchange loss in net income, with an offsetting credit to OCI D. All at once at the end of the hedge period 3. With an option contract fair value hedge of a foreign currency-denominated asset, a separate entry to record the change in the time value of the option was not necessary because: A. Calculation of the time value of an option is not feasible B. The dollar amount of the time value of an option contract is not material C. Option contracts do not have a time value D. The net foreign exchange gainfloss recorded in previous entries generated this amount in net income without a separate entry 4. Related to a rm commitment, which is following about required journal entries at the inception of the hedge? A. Nojournal entries are needed on this date no matter what type of instmment is used for hedging purposes B. A joumal entry is needed for the rm commitment because it is an erncecutoryr contract on this date C. Nojournal entry is needed for the rm commitment because it is not yet material to the nancial statements D. Nojournal entries are needed on this date if a forward contract is used as a hedge instmment 5. No matter what type of hedge instrument is used or transaction type is being hedged, A. The net effect on assets will be the translated amount of the foreign currency receiyed or paid, measured at the spot rate on the date the contract is executed. B. The net effect on stockholders' equity as_g_r_es_gl_t_gf_ the hedge and underlying transaction will be zero. C. In the case of a sale, the net effect on stockholders' equity will be equal to the sales price of the goods less the cost ofthe hedging instrument (option premium or forward contract discountipremium) D. In the case of a sale, the net effect on stockholders' equity will be equal to the sales price of the goods

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