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:

Concrete Operational Stage

A stage in Piaget’s theory of cognitive development, from about 7 to 12 years, during which children gain the ability to think logically about concrete events.

Hypothetical Thinking

The ability to consider possibilities, scenarios, or outcomes that are not immediately present in the environment or have not yet occurred.

Piaget’s Theory

A developmental theory proposed by Jean Piaget, which outlines how children progress through four stages of cognitive development.

Autism Spectrum Disorder

A range of neurodevelopmental conditions characterized by challenges in social interaction, communication, and restrictive repetitive behaviors.