The Following Information Pertains to Questions

question 42

Multiple Choice

The following information pertains to questions
XYZ Corp has a calendar year end.On January 1,2010,the company borrowed $5,000,000 U.S.dollars from an American Bank.The loan is to be repaid on December 31,2013 and requires interest at 5% to be paid every December 31.The loan and applicable interest are both to be repaid in U.S.dollars.XYZ does not hedge to minimize its foreign exchange risk.
The following exchange rates were in effect throughout the term of the loan: The average rates in effect for 2010 and 2011 were as follows:
-By what amount (in Canadian Dollars) would ABC have to adjust its Loan Liability on December 31,2011 as a result of the year's foreign exchange rate fluctuations?

• A)Nil.
• B)$2,500 increase.
• C)$2,500 decrease.
• D)$3,500 decrease.

---

Definitions:

Generalized State

A condition or situation that applies broadly, not limited to specific instances, often referring to widespread effects or characteristics.

Affect

A psychological term referring to the underlying experience of feeling, emotion, or mood.

Emotion

A complex state of feeling that results in physical and psychological changes and influences thought and behavior.

Social Cognition

The study of how people process, store, and apply information about others and social situations, including how they interpret, analyze, remember, and use information in social interactions.