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

question 1

Multiple Choice

Use the following information to answer the question(s) below.
On December 1,2011,Thomas Company,a U.S.corporation,purchases inventory from a vendor in Italy for 400,000 euros.Payment is due in 90 days.To hedge the transaction,Thomas signs a forward contract to buy 400,000 euros in 90 days at $1.3670.Thomas uses a discount rate of 6% (present value factor for 30 days = .9950;60 days = .9901;90 days = .9851) .Assume the forward contract will be settled net and this is a cash flow hedge.Currency exchange rates are shown below:

-What is the fair value of the forward contract at December 31,2011?

• A)$400.00 liability
• B)$400.00 asset
• C)$396.04 liability
• D)$396.04 asset

Identify and understand the criteria for evaluating capital investments.

Understand the process of decision-making under uncertainty.

Learn to calculate and interpret the return to risk ratio.

Understand the impact of covariance on portfolio standard deviation.

---

Definitions:

Learned Optimism

The practice of recognizing and challenging negative thoughts in order to develop a more positive outlook on life and increase resilience.

Explanatory Style

A psychological attribute that indicates how people explain to themselves why they experience particular events, either positive or negative.

Valid Concern

Any issue or problem that is grounded in reality and deemed legitimate or reasonable to worry about or consider.

Disaster Component

A critical aspect or feature of a disaster, including elements that contribute to the severity and impact of the disaster.