As a Foreign Exchange Hedge, Currency Swaps Have All of the Following

question 54

Multiple Choice

As a foreign exchange hedge, currency swaps have all of the following characteristics EXCEPT

• A) each party pays the other's interest payment.
• B) principal amounts are reversed at the spot rate at maturity.
• C) an initial exchange by two parties of two principal amounts in two different currencies.
• D) principal amounts are reversed at a pre-agreed rate at maturity.

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Definitions:

Direct Materials

Items that directly enter into the final product and can be easily traced and assigned to it.

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including materials, labor, and overhead.

Overhead Applied

An accounting method that allocates overhead costs to specific cost objects, such as products or jobs, based on a pre-determined rate or base.

Job Order Costing System

An accounting system used to assign costs to specific jobs or orders, tracking the direct materials, direct labor, and manufacturing overhead per job.