Question 1

Which of the following would NOT be considered a foreign exchange hedge?

Accepted Answer

A) The placement of large amounts of Canadian funds with a bank in Zurich,Switzerland. 
B) A foreign currency futures contract. 
C) A foreign currency option contract. 
D) A forward exchange contract. 
A) The placement of large amounts of Canadian funds with a bank in Zurich,Switzerland. 
B) A foreign currency futures contract. 
C) A foreign currency option contract. 
D) A forward exchange contract.

Question 2

The following information pertains to questions 
XYZ Corp has a calendar year end.On January 1,2010,the company borrowed $5,000,000 U.S.dollars from an American Bank.The loan is to be repaid on December 31,2013 and requires interest at 5% to be paid every December 31.The loan and applicable interest are both to be repaid in U.S.dollars.XYZ does not hedge to minimize its foreign exchange risk.
The following exchange rates were in effect throughout the term of the loan:   The average rates in effect for 2010 and 2011 were as follows:  
-What is the amount of interest paid (in Canadian Dollars)during 2010?

Accepted Answer

A) $250,000 
B) $372,500 
C) $287,330 
D) $287,250 
A) $250,000 
B) $372,500 
C) $287,330 
D) $287,250

Which of the following would NOT be considered a foreign exchange hedge?

A Survey of International Accounting

Investments in Equity Securities

Business Combinations

Consolidated Statements on Date of Acquisition

Consolidation Subsequent to Acquisition Date

Intercompany Inventory and Land Profits

Aintercompany Profits in Depreciable Assets

Consolidated Cash Flows and Ownership Issues

Other Consolidated Reporting Issues

Translation and Consolidation of the Financial Statements of Foreign Operations

Accounting for Not-For-Profit Organizations and Governments

Filters

Exam 10: Foreign Currency Transactions

Which of the following would NOT be considered a foreign exchange hedge?

A Survey of International Accounting

Investments in Equity Securities

Business Combinations

Consolidated Statements on Date of Acquisition

Consolidation Subsequent to Acquisition Date

Intercompany Inventory and Land Profits

Aintercompany Profits in Depreciable Assets

Consolidated Cash Flows and Ownership Issues

Other Consolidated Reporting Issues

Translation and Consolidation of the Financial Statements of Foreign Operations

Accounting for Not-For-Profit Organizations and Governments

Filters