If a Firm Has Achieved Its Target Cash Balance the Net

question 12

Multiple Choice

If a firm has achieved its target cash balance the net present value is:

• A) positive because the cash balance is positive.
• B) zero because increasing the cash balance increases the interest cost.
• C) negative because the cash balance has a financing cost.
• D) positive because decreasing the cash decreases the cost of illiquidity.
• E) None of these.

Calculate the cost and impact of foreign currency transactions on financial statements.

Distinguish between different hedging strategies: fair value hedges, cash flow hedges, and speculative transactions.

Record and adjust foreign currency transactions and hedges according to IFRS 9.

Analyze the effect of foreign exchange rate changes on forward contracts, receivables, payables, and loans.

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