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Requirements: you have to find the net income effect for first year and second year and net those out and give one solid number as
Requirements:
- you have to find the net income effect for first year and second year and net those out and give one solid number as a result, and say what is the net income effect (decrease or increase).
- Forward contract as a fair value hedge, dollar impact of all of the transactions for all of 2018. Have to net out all income effects (gains, losses, revenues, expenses, etc). Do for 2018 as a single number and for 2019 as well.
- Option contract as a cash flow hedge, dollar impact of all transaction for 2018, net it together and do the same for 2019.
- What would the option contract be at the end before you close it out, which in this case would be January 31 and would that be a debit or credit balance.
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