anticipated operating results by management and investors.

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anticipated operating results by management and investors.

5. If plains States chooses not to change hedge their euro receivable, the amount they

receive in six months will be_________.

(a) $1,125,000

(b) $1,137,500

(c)$1,115,500

(d) undeterminable today

6. If Plains States chooses to hedge its transaction exposure in the forward market, it will ________ € 1, 250,000 forward at a rate of ______.

(a) sell; $0.8750/€

(b) sell; $0.8924/€

(c) buy; $0.8750/€

(d) buy; $0.8924/€

7. Plains States chooses to hedge its transaction exposure in the forward market at the

available forward rate. The payoff in 6 months will be______.

(a) $1,137,500

(b) $1,125,000

(c) $1,093, 750

(d) $1,075, 000

8. If Plains States locks in the forward hedge at $0.8750/€, and the spot rate when the

transaction was recorded on the books was $0.8924/€, this will result in a “ foreign

exchange loss” accounting transaction of _______.

(a) $0

(b) $21,750

(c) This was not a loss, it was a gain of $21,750.

(d) There is not enough information to answer this question.

9. Plains States would be ________ by an amount equal to __________ with a forward

hedge than if they had not hedged and their predicted exchange rate for 6 months had

been correct.

(a) better off; $43,750

(b) better off; $62500

(c) worse off; $43,750

(d) worse off; $62500

10. If Plains States chooses to implement a money market hedge for the Euro receivables, how much money will the firm borrow today?

(a) € 1,201,923

(b)$1,201,923

(c) €1,196,172

(d)$ 1,196,172

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2119 project(s) posted hire 2 freelancers
Member since: 2020-02-01
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