The Following Information Pertains to Questions

question 60

Multiple Choice

The following information pertains to questions
ABC Inc.sells thermal compressors throughout the world.On January 1,2013,the company sold 500 compressors to an American supplier at a total cost $60,000 U.S.when the spot rate was US$1=$1.1750CDN.Payment on the invoice was due by May 1,2013.ABC entered into a 4-month hedge with its bank at a forward rate of $1.20CDN on January 2,2013.ABC's year-end is on January 31,and on that date in 2013,the spot rate in effect was $1.1825CDN.
ABC received payment from its supplier on May 1,2013 when the spot rate was US$1=$1.1975 CDN.
-What is the required adjustment to ABC's premium on this contract at year-end?

• A)Nil.
• B)$1,500 Increase
• C)$375 Increase
• D)$375 Decrease

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Definitions:

Anterior Cavity

The front part of the body's cavity, which includes structures in the chest and abdomen.

Cornea

The clear, dome-shaped surface that covers the front of the eye, plays a key role in focusing vision, and is critical to eye health.

Gustatory

Pertaining to the sense of taste or the sensation of tasting.

Oral Hygiene

The practice of keeping the mouth, teeth, and gums clean and healthy to prevent disease.