Assume That on January 15, 2021 Singh Agrees to Purchase

question 71

Multiple Choice

Assume that on January 15, 2021 Singh agrees to purchase US$100,000 for C$117,000 for delivery on January 15, 2022. The exchange rate at Singh's December 31 year-end is US$1 = C$1.20 and the January 15, 2022 exchange rate is US$1 = C$1.19. What is the foreign exchange gain or loss recognized at December 31, 2021?

• A)$2,000 gain.
• B)$2,000 loss.
• C)$3,000 gain.
• D)$3,000 loss.

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Definitions:

Mutual Fund

A financial tool that combines money from various investors to invest in a variety of assets including stocks, bonds, and money market instruments.

Turnover Ratio

A measure of the trading activity in a portfolio, indicating how often assets within the portfolio are bought and sold over a specific period.

Average Daily Assets

A measure used in finance to calculate the average value of assets held by a fund or company over a specific period.

Mutual Fund

An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets.