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Cards In This Set
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A spot rate may be defined as
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The price a foreign currency can be purchased or sold today
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The forward rate may be defined as
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The price today at which a foreign currency can be purchased or sold in the future
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Which statement is true regarding a foreign currency option
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A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future
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A U.S company sells merchandise to a foreign company denominated in U.S. DOLLARS. Which of the following statements is true?
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No foreign exchange gain or loss will result
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A U.S company sells merchandise to a foreign company denominated in the foreign currency. Which of the following statements is true?
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If the foreign currency appreciates, a foreign exchange gain will result
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A U.S company buys merchandise from a foreign company denominated in U.S dollars. Which of the following statements is true?
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No foreign exchange gain or loss will result
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A U.S. company buys merchandise from a foreign company denominated in the foreign currency. Which of the following statements is true?
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If the foreign currency appreciates, a foreign exchange loss will result
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SFAS 133 provides guidance for hedges of all the following sources of foreign exchange risk except ?
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Deferred foreign currency gains and losses
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All of the following data may be needed to determine the fair value of a forward contract at any point in time except?
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The future spot rate
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A forward contract may be used for which of the following
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1,2,3,4
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A company has a discount on a forward contract for an asset. How is the discount recognized over the life of the contract?
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It is charged to accumulated other comprehensive income
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A speculative derivative would be similar to which type of hedge?
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An option designated as a fair value hedge
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Which of the following statements is true concerning hedge accounting?
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Hedges of foreign currency firm commitments are used for future sales or purchases
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All of the following hedges are used for future purchase/sale transactions except?
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Forward contracts used to hedge a foreign currency denominated liability
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Which of the following approaches is used in the United States in accounting for foreign currency transactions?
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Two-transaction perspective;accrue foreign exchange gains and losses
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