Freddy's Fir Tree Company Is a New Business

question 39

Essay

Freddy's Fir Tree Company is a new business. The following accounts are required in the general ledger.

Organize the accounts into the order in which they should appear in the general ledger of Freddy's Fir Tree Company and assign account numbers.
Use the following system to assign account numbers.
1000-1999 Assets
2000-2999 Liabilities
3000-3999 Shareholder's equity account
4000-4999 Revenues
5000-5999 Expenses

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Definitions:

Hedge Ratio

The ratio of the size of a position in a hedging instrument to the size of the position being hedged, used to minimize risk.

Dollar Exposure

The extent to which a company or investor is affected by changes in the value of the U.S. dollar against foreign currencies.

Call Delta

An option's sensitivity measure that indicates how much the price of the call option is expected to change in response to a one-point change in the price of the underlying asset.

Two-State

Usually references a model involving two possible outcomes or states, often used in finance to model investment under uncertainty.