Due to Price Risk from the Foreign Currency Purchase of Aviation

question 417

Multiple Choice

Due to price risk from the foreign currency purchase of aviation fuel, an airliner has purchased forward contracts to hedge against fluctuations in the exchange rate. When recalculating the exchange losses from individual purchases of jet fuel, which of the following details does the internal auditor need to validate? 1. The hedge documentation designating the hedge. 2. The spot exchange rate on the transaction date. 3. The terms of the forward contract. 4. The amount of fuel purchased.

• A) 1 and 2
• B) 1 and 4
• C) 2 and 3
• D) 3 and 4

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