Assuming a Forward Contract Was Entered into on December 16

question 53

Multiple Choice

Assuming a forward contract was entered into on December 16, at what amount should the forward contract be recorded at December 31, 2018? Assume an annual interest rate of 12% and a fair value hedge.The present value for one month at 12% is .9901.

• A) $ 200.
• B) $ 295.
• C) $ 495.
• D) $ 500.
• E) $ 9,300.

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Definitions:

Changing Seasons

The transition periods between the main climatic seasons (spring, summer, autumn, and winter), affecting weather patterns, ecosystems, and human activities.

Ebb and Flow

A metaphorical description of the continual fluctuation or cyclic patterns of change, resembling the movement of tides.

Differentiation

The process by which a society or social system becomes more complex by creating specialized roles and institutions.

Functionalism

A theoretical approach in social sciences that emphasizes the social stability and equilibrium maintained through the interdependence of societal institutions.