Simpson Sign Company Based in Frostbite Falls, Minnesota Has a 6-Month

question 3

Multiple Choice

Simpson Sign Company based in Frostbite Falls, Minnesota has a 6-month C$100,000 contract to complete sign work in Winnipeg, Manitoba, Canada. The current spot rate is $1.02/C$ and the forward rate is $1.01/C$. Under conditions of equilibrium, management would use ________ today when preparing operating budgets.

• A) $102,000
• B) $101,000
• C) $100,000
• D) none of the above

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Definitions:

Expected Number

The anticipated value in a probability distribution, representing the mean of a random variable.

Binomial Distribution

A probability distribution that summarizes the likelihood of a variable, which has only two possible outcomes, across a number of trials.

Normal Approximation

An approach in statistics for estimating the probability of different outcomes under the assumption that the data follow a normal distribution.

Symmetrical Distribution

A distribution where the left and right sides are mirror images of each other, indicating equal distribution around the central point.