Car Corp (A U

question 79

Multiple Choice

Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2011, with payment of 10 million Korean won to be received on January 15, 2012. The following exchange rates applied:

Assuming a forward contract was entered into, at what amount should the forward contract be recorded at December 31, 2011? Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is .9901.

• A) $200.
• B) $295.
• C) $495.
• D) $500.
• E) $9,300.

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Definitions:

Increase Supply

An upward shift in the supply curve, indicating more of a good or service is available for sale at any given price, usually the result of factors like improved technology or decreased production costs.

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually pay.

Soybeans

Edible legumes native to East Asia, widely grown for their numerous uses, which include producing oil, as a source of protein, and in many food products.

Willingness To Pay

The maximum price a consumer is prepared to pay for a good.