Assume Jelly Corporation, a U

question 35

Multiple Choice

Assume Jelly Corporation, a U.S.-based MNC, obtains a one-year loan of 1,500,000 Malaysian ringgit (MYR) at a nominal interest rate of 7%. At the time the loan is extended, the spot rate of the ringgit is $.25. If the spot rate of the ringgit in one year is $.28, the dollar amount initially obtained from the loan is $____, and $____ are needed to repay the loan.

• A)375,000; 449,400
• B)449,400; 375,000
• C)6,000,000; 5,357,143
• D)5,357,143; 6,000,000

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Definitions:

Retiring Bonds

Retiring bonds involves the repayment of the principal amount of the bond issue by the issuer before its maturity, often to take advantage of lower interest rates.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuer's equity shares at certain times during the bond's life, usually at the discretion of the bondholder.

Carrying Value

The book value of assets and liabilities on a company's balance sheet, calculated as the original cost minus any depreciation, amortization, or impairment costs.

Equity Accounts

Equity accounts represent the owner's value in a business, reflected through transactions like contributed capital and retained earnings.