On December 1, 2021, Keenan Company, a U

question 48

Multiple Choice

On December 1, 2021, Keenan Company, a U.S. firm, sold merchandise to Velez Company of Canada for 150,000 Canadian dollars (CAD) . Collection of the receivable is due on February 1, 2022. Keenan purchased a foreign currency put option with a strike price of $0.97 (U.S.) on December 1, 2021. This foreign currency option is designated as a cash flow hedge. Relevant exchange rates follow: Compute the fair value of the foreign currency option at December 31, 2021.

• A) $6,000.
• B) $4,500.
• C) $3,000.
• D) $7,500.
• E) $1,500.

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Definitions:

Overcompensating Behavior

Refers to excessive efforts made by an individual to cover up feelings of inadequacy or shortcomings, often observed in psychology as a defense mechanism.

Organ Inferiority

In Adler’s version of psychoanalysis, the idea that people are motivated to succeed in adulthood in order to compensate for whatever they felt, in childhood, was their weakest aspect.

Inferiority Complex

A psychological condition where an individual feels a deep sense of insecurity and inadequacy, often originating from childhood experiences.

Neo-Freudians

Psychologists who were influenced by Freud's theories but extended or diverged from his ideas to form their own theories.