On March 1, 20X2, McBride Ltd - Assume That the Transaction Qualifies as a Fair-Value Hedge

question 20

Multiple Choice

On March 1, 20X2, McBride Ltd. issued a purchase order to Tao Heavy Machines (Singapore) Inc. to acquire a drilling machine for $400,000 SGD. On the same day, McBride entered into a forward contract to receive $400,000 SGD on July 31, 20X2. The machine was delivered on June 1, 20X2, and payment was made July 31, 20X2. McBride has an April 30 year-end. The following information has been provided: $\begin{array}{|l|c|c|}\hline \text { Date } & \text { Spot Rate } & \text { Forward rate to July } 31,20 \times 2 \\\hline \text { March } 1,20 \times 2 & .7686 & .7810 \\\hline \text { April } 30,20 \times 2 & .7702 & .7818 \\\hline \text { June } 1,20 \times 2 & .7940 & .7985 \\\hline \text { July } 31,20 \times 2 & .7995 & \text { n/a }\\\hline \end{array}$

- Assume that the transaction qualifies as a fair-value hedge. What is the cost of the hedge?

• A)$2,200
• B)$4,640
• C)$4,960
• D)$6,680

---

Definitions:

Class Inequality

The disparities in access to resources, opportunities, and privileges among different social classes within a society.

Gender Inequality

The unequal treatment or perceptions of individuals based on their gender, affecting opportunities, resources, and rights.

Wife Assault

A form of domestic violence where a husband inflicts physical, sexual, or psychological harm upon his wife.

Human History

The recorded or interpreted events of the human past, comprising social, economic, cultural, and political developments.