Question
On July 1, 2015 the West Company purchased a 1,000,000 Pound Sterling CD from the Kardashian Bank of London. This 10% 3 year CD pays
On July 1, 2015 the West Company purchased a 1,000,000 Pound Sterling CD from the Kardashian Bank of London. This 10% 3 year CD pays interest on June 30. Additional information is as follows:
July 1, 2015 $1.85 = 1 pound sterling
December 31, 2015 $1.99 = 1 pound sterling
June 30, 2016 $1.88 = 1 pound sterling
December 31, 2016 $2.02 = 1 pound sterling
June 30, 2017 $2.05 = 1 pound sterling
December 31, 2017 $2.07 = 1 pound sterling
June 30, 2018 $2.00 = 1 pound sterling
Answer the following
If West had purchased a forward contract on July 3rd 2015 to sell the 1 million pound sterling for $1.99 how would the income or loss of West have been different in 2015, 2016, 2017, 2018?
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Date Particulars Amount Pond Spot Rate Forward rate GainLoss Total GainLoss 01Jul15 Purchases ...
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Financial Accounting Tools for Business Decision Making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
5th Edition
9781118560952, 1118560957, 978-0470239803
