The Following Information Pertains to Questions

question 13

Multiple Choice

The following information pertains to questions
On July 1,2014,when the spot rate was US$1=CDN$1.1445,North Inc,based in the Alberta,ordered merchandise from an American supplier for US$600,000.Delivery was scheduled for the month of September,with payment to be made in full by December31,2014.
Once the order was placed,North entered into a forward contract with its bank to purchase US$600,000 in December at the forward rate of $1.1625CDN.The merchandise was received on October 1,2014,when the spot rate was US$1=$1.1575CDN.On October 31,the company's year-end,the spot rate was $1.1690.North purchased the U.S.dollars to pay its supplier on November 15,2014 when the spot rate was $1.1725CDN.
-What is the amount of the forward contract?

• A)$686,700
• B)$697,500
• C)$701,400
• D)$703,500

---

Definitions:

American People

Citizens or residents of the United States of America.

Economic Expansion

A phase of the business cycle when the economy grows, characterized by increasing employment, economic output, and consumer spending.

Supply-Siders

Advocates of the economic theory that reducing tax rates and regulatory barriers to production lead to an increase in supply of goods and services, driving economic growth.

Tax Rates

The percentages at which income, purchases, or other financial transactions are taxed by governments.