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RXN's Year-End Is on December 31

question 11

Multiple Choice

RXN's year-end is on December 31. On November 1, 2014 when the U.S. dollar was worth $1.165 CDN, RXN sold merchandise to an American client for $300,000. Full payment of this invoice was expected by March 1, 2015. On December 1, the spot rate was $1.1450 CDN and the three-month forward rate was $1.1250 CDN. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a contract with its bank on December 1, 2014 to deliver $300,000 U.S. in three months' time. The spot rate at year-end was $1.16 CDN and the forward rate from December 31, 2014 to March 1, 2015 was $1.14 CDN. On March 1, 2015, RXN received the $300,000 U.S. from its client and settled its contract with the bank. The forward contract was to be accounted for as a fair value hedge of the US dollar receivable. Significant dates and exchange rates pertaining to this transaction are as follows: How much (in Canadian Dollars) will RXN expect to receive from the bank when its forward contract is settled?

Definitions:

Race Matters

The importance and impact of racial identity and ethnicity on individuals' social experiences, opportunities, and interactions within society.

Group Membership

Belonging or being a part of a particular group, organization, or category of people.

Unfair Treatment

Acts of discrimination or injustice towards individuals or groups, often based on bias, prejudice, or favoritism.

Discrimination

Unfair or prejudicial treatment of individuals based on characteristics such as race, gender, age, or sexual orientation.