Assuming a Forward Contract Was Entered into on December 16

question 38

Multiple Choice

Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.'s 2018 income statement related to this transaction? Assume an annual interest rate of 12% and a fair value hedge.The present value for one half-month at 12% is .9950.

• A) $ 700 (gain).
• B) $ 700 (loss).
• C) $ 995 (gain).
• D) $ 300 (loss).
• E) $ 298 (gain).

---

Definitions:

Vertebra Prominens

The seventh cervical vertebra (C7) characterized by its long and prominent spinous process.

Hyoid Bone

A U-shaped bone in the neck that supports the tongue and provides attachment points for muscles associated with swallowing and speech.

Occipital Ridge

A ridge on the external surface of the occipital bone of the skull, important for muscle attachment and structural integrity.

Deltoid

A triangular muscle of the shoulder that is responsible for lifting the arm and giving the shoulder its range of motion.