On December 1, 20X8, Hedge Company entered into a 60-day speculative forward contract to sell 200,000 British pounds (£) at a forward rate of £1 = $1.78. On the same day it purchased a 60-day speculative forward contract to buy 100,000 euros (€) at a forward rate of €1 = $1.42.The rates are as follows: Forward Rate for Forward Rate forDateSpot Rate Feb 1 Spot Rate Feb 1December 1, 20X8£1=$1.76 $1.78 €1=$1.40 $1.42 December 31, 20X8£1= 1.73 1.74 €1= 1.38 1.40 February 1, 20X9£1= 1.75 €1= 1.41 Hedge had no other speculation transactions in 20X8 and 20X9. Ignore taxes.Based on the preceding information, what is the net gain or loss on the euro speculative contract?
A. $6,000 gain
B. $3,000 loss
C. $8,000 gain
D. $1,000 loss
Answer: D
You might also like to view...
Satisfied customers who make product recommendations to others act as a firm's "auxiliary" sales force
Indicate whether the statement is true or false
Positioning plays a pivotal role in marketing strategy, because it links market analysis and competitive analysis to environmental analysis
Indicate whether the statement is true or false
The law that prohibits the use of evidence in a criminal trial that is wrongfully obtained by police is called the_________rule
Fill in the blank(s) with correct word
A federal auditor for nationally chartered banks from a random sample of 100 accounts found that the average demand deposit balance at the First National Bank of small town was $549.82 . If the auditor needed a point estimate for the population mean for all accounts at this bank, what would she use?
a. The average of $54.98 for this sample. b. The average of $549.82 for this sample. c. There is no acceptable value available. d. She would survey the total of all accounts and determine the mean. e. Not enough information is given to answer this question.