You Are a Financial Manager with JCN,Co

question 54

Multiple Choice

You are a financial manager with JCN,Co.and you have used a forward contract to hedge a yen 100,000,000 payment the company expects to receive in 90 days.Your contract calls for you to deliver yen at 109.75 yen per U.S.dollar.Suppose the spot rate at that time is 111.25 yen per U.S.dollar.Did you gain or lose on the hedge? How much?

• A) Gain, $66,666.67
• B) Loss, $66,666.67
• C) Gain, $12,285.33
• D) Loss, $12,285.33

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Definitions:

Calculated

The result obtained from mathematical or statistical operations on data or values.

Test Statistic

A calculated value from sample data used in hypothesis testing to determine whether to reject the null hypothesis.

Calculated Value

A numeric value derived from mathematical operations on data or parameters.

Population Variances

A measure of the dispersion of all the values in a population, reflecting how much the individuals within the population differ from the population mean.