# Ch. 9 HW - Results Reporter Out of 15 questions, you...

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Results Reporter Out of 15 questions, you answered 15 correctly with a final grade of 100% 15 correct (100%) 0 incorrect (0%) 0 unanswered (0%) Your Results: The correct answer for each question is indicated by a . 1 CORRECT The foreign exchange rate for the immediate delivery of currencies exchanged is called the: A) forward rate. B) historical rate. C) spot rate. D) market rate. E) swap rate. 2 CORRECT On November 1 of the current year, Patriot Inc. purchased a container of electrical components from its supplier in Japan. Patriot agreed to pay 15,000,000 in 90 days. The exchange rate on November 1 was \$1 = 120 . Patriot decided to hedge the transaction and entered into a 90 day forward contract to purchase yen at a cost of \$1 = 125 . The 60 day forward rate that would take Patriot to the December 31 fiscal year end was \$1 = 127.50 . On December 31, the spot rate was \$1 = 118 , and the 30-day forward rate was \$1 = 122 . What is the balance in the forward contract account on November 1 of the current year? (For purposes of this exercise, use a present value factor of 1.) A) \$0 B) \$5,000 debit

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C) \$5,000 credit D) \$2,353 debit E) \$7,353 credit Feedback: The value of a forward contract on the day it is taken out is always \$0. 3 CORRECT On November 1 of the current year, Patriot Inc. purchased a container of electrical components from its supplier in Japan. Patriot agreed to pay 15,000,000 in 90 days. The exchange rate on November 1 was \$1 = 120 . Patriot decided to hedge the transaction and entered into a 90 day forward contract to purchase yen at a cost of \$1 = 125 . The 60 day forward rate that would take Patriot to the December 31 fiscal year end was \$1 = 127.50 . On December 31, the spot rate was \$1 = 118 , and the 30-day forward rate was \$1 = 122 . What is the balance in the forward contract account on December 31 of the current year? (For purposes of this exercise, use a present value factor of 1.) A) \$7,119 debit B) \$7,119 credit
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## This note was uploaded on 08/25/2011 for the course ACCT 440 taught by Professor Suresh during the Spring '11 term at Copenhagen Business School.

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Ch. 9 HW - Results Reporter Out of 15 questions, you...

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