Need the answer to these questions and explanation thanks!
1. Match each of the following terms to the correct denition. Spot rate: Forward Rate: Stn'ke Pn'ce: _ Put Option: Call Option: WEI-3.53.} F. Optimum Premium: OPTIONS [E]: The option the sell currency in the future at a specified rate, the purchase price of an option contract, The 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. In example 1, when recording a cash ow hedge of a forward contract of a foreign currency-denominated asset, howr is the discount on the contract treated? A. All at once at the beginning of the hedge period _ Amortized equally overtime as a foreign exchange loss in net income, with an offsetting credit to sales _ Amortized equally overtime as a foreign exchange loss in net income, with an offsetting credit to OCI _ All at once at the end of the hedge period In example 2, with an option contract fair 1yalue 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 1Iralue of an option contract is not material C. Option contracts do not have a time 1.ralue D. The net foreign exchange gaintloss recorded in preyious entries generated this amount in net income without a separate entry In example 3 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 insthmerIt is used for hedging purposes 4. In example 3 related to a rm commitment, which is following about required joumal entries at the inception of the hedge? A. No journal entries are needed on this date no matter what type of insthment is used for hedging purposes B. A joumal entryr is needed for the rm commitment because it is an executory contract on this date C. No journal entry is needed for the rm commitment because it is not yet material to the nancial statements D. No journal entries are needed on this date it a forward contract is used as a hedge instrument 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 received or paid, measured at the spot rate on the date the contract is executed. B. The net effect on stocltholders' equity asa _r_esgl_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 toward contract discountlpremium} D. In the case of a sale, the net effect on stockholders' equity will be equal to the sales price of the goods
