If an Australian Company Enters a Forward Exchange Contract to Buy

question 13

Multiple Choice

If an Australian company enters a forward exchange contract to buy US$15 000, then which of the following applies?

• A) The company's contractual obligation (at the forward rate) and contractual right (at the spot rate) are settled on a net basis.
• B) The company has a contractual obligation to deliver foreign currency at the settlement date and that obligation is realised at the spot rate.
• C) The company has a contractual right to receive US$15 000 at the settlement date and that right is an asset fixed in A$ at the forward rate.
• D) The company's forward contract will act as a hedge against a recognised asset.

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Definitions:

Geological Events

Natural occurrences like earthquakes, volcanic eruptions, or plate movements that shape the earth's surface and environment.

Morphological Transition

A process involving a significant change in the structure or form of an organism or part of an organism usually due to genetic mutation or environmental pressures.

Anagenesis

Refers to wholesale transformation of a lineage from one form to another. In macroevolutionary studies, anagenesis is considered to be an alternative to lineage splitting or speciation.

Lineage

Lineage refers to a chain of ancestors and their descendants. A lineage may be the successive generations of organisms in a single population, the members of an entire species during an interval of geological time, or a group of related species descending from a common ancestor.