The Following Information Pertains to Questions

question 24

Multiple Choice

The following information pertains to questions
RXN's year-end is on December 31.On November 1,2014 when the U.S.dollar was worth $1.165 CDN,RXN sold merchandise to an American client for $300,000.Full payment of this invoice was expected by January 31,2015.On December 1,the spot rate was $1.1450 CDN and the three-month forward rate was $1.1250 CDN.
In order to minimize its Foreign Exchange risk and exposure,RXN entered into a contract with its bank on December 1,2014 to deliver $300,000 U.S.in three months time.The spot rate at year-end was $1.16 CDN.On March 1,2015,RXN received the $300,000 U.S.from its client and settled its contract with the bank.
Significant dates pertaining to this transaction are as follows:
-What is the amount of RXN's foreign exchange gain or loss prior to its hedge?

• A)Nil
• B)A $6000 loss.
• C)A $6,000 gain.
• D)A $4,500 gain.

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Definitions:

Physical Resources

Tangible assets used by a company to operate and produce goods or services, including buildings, machinery, and equipment.

Differentiation Strategy

A business approach where a company seeks to distinguish its products or services from competitors through unique features.

Employee Skills

The specific competencies and abilities possessed by workers that enable them to perform their job duties effectively.

Strategic Planning

The process of defining a company's direction and making decisions on allocating resources to pursue this strategy.