Xin Is Selling His Transformer Over the Internet for C$500

question 28

Multiple Choice

Xin is selling his transformer over the internet for C$500.An interested buyer says he is willing to pay 360 euro in six months.What position should Xin take to eliminate his foreign exchange exposure?

• A)500 long Canadian forward contract
• B)500 short Canadian forward contract
• C)360 long euro forward contract
• D)360 short euro forward contract

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Definitions:

Dividends In Arrears

Dividends on preferred stock that have been declared but not yet paid to shareholders.

Cumulative Preferred Stock

A type of preferred stock that accrues dividends if they are not paid in the year they are due, with these dividends being required to be paid out before any dividends can be paid to common stockholders.

Stockholders' Equity

The ownership interest of shareholders in a corporation, represented by share capital plus retained earnings minus treasury shares.

Par Value

A nominal value assigned to share of stock by the corporation's charter, used primarily for legal purposes.