Hudson Valley Distributors Wants to Be Sure It Has 10,000

question 26

Multiple Choice

Hudson Valley Distributors wants to be sure it has 10,000 cases of Beaujolais Nouveau to sell next November. In January, they enters into an agreement to buy the wine at a price of 34.62 euros to the case. Payment will be due at the end of November. They expect to sell the wine to restaurants and retailers for $63 per case. Hudson Valley has hedged its foreign exchange risk by entering into a forward contract to purchase euros in November at $1.30/euro. If the spot exchange rate at the end of November is $1.35/euro, Hudson Valley's gross profit will be

• A) $283,800.
• B) $138,415.
• C) $162,630.
• D) $179,940.

---

Definitions:

Article 2(A)

A provision found in the Uniform Commercial Code that governs leases of personal property in the United States.

UCC

The Uniform Commercial Code (UCC) is a comprehensive set of laws that governs all commercial transactions in the United States.

Lessor

An individual or entity that leases property to another party, known as the lessee.

Article 2(A)

A section of the Uniform Commercial Code that deals with leases of personal property.