Use the Following Information to Answer the Question(s) Below

question 26

Multiple Choice

Use the following information to answer the question(s) below.

On November 2, 2014, Bellamy Corporation sells product to their Danish customer. At the same time, Bellamy signed a forward contract to sell 200,000 Danish krone in ninety days to hedge the account receivable at $0.1905, the 90-day forward rate. The receivable is expected to be collected in ninety days. Assume the forward contract will be settled net and this is a fair value hedge. The related exchange rates are shown below:

-Assuming a present value factor of 1 for simplicity,what is the fair value of this forward contract on November 2?

• A)$-0-
• B)$100 asset
• C)$100 liability
• D)$38,100 asset

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Definitions:

Spermatophore

A capsule or mass created by males of various species containing sperm cells that is transferred to the female's reproductive tract.

Anisogamy

Refers to sexual reproduction involving the fusion of two dissimilar gametes; individuals producing the larger gamete (eggs) are defined as female, and individuals producing the smaller gamete (sperm) are defined as male.

Operational Sex Ratio

The ratio of sexually receptive males to females in a population, affecting mating behavior and competition.

Opportunity For Selection

Refers to the variance in fitness within a population. When there is no variance in fitness, there can be no selection; when there is large variance in fitness, there is a great opportunity for selection. In this sense, the opportunity for selection constrains the intensity of selection that is possible.