Which of the Following Statements Is True Concerning Forward Contracts

question 30

Multiple Choice

Which of the following statements is true concerning forward contracts classified as hedges of an identifiable foreign currency commitment?

• A)​Forward contracts used as hedges cannot exceed the foreign currency commitment.
• B)​Forward contracts cannot extend for a time period after the transaction date of the commitment.
• C)​The gain or loss traceable to the time period after the transaction date of the commitment are treated as a hedge of a receivable or payable.
• D)​None of these statements is true.

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Definitions:

Borrowed Funds

Money obtained through loans, typically used for business ventures or investment with an expectation of repayment.

Incumbent Management

The current team operating and managing a company, particularly during an attempt of take-over or acquisition.

Management Buyout

A transaction where a company's management team purchases the assets and operations of the business they manage.

Proxy Contest

is a situation where two or more factions within a company's shareholders compete for votes in order to control decisions made by the board of directors.