A Major Disadvantage of Forward Currency Contracts Is

question 9

Multiple Choice

A major disadvantage of forward currency contracts is

• A)the margin that must be committed at the time one enters the contract
• B)standardized contract dollar amounts
• C)only three banks offer them in the U.S.
• D)none of the above

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Definitions:

Net Markdowns

The total decrease in the selling price of merchandise over a period, minus any markdown cancellations or recoveries.

Freight-in Charges

Costs incurred in bringing inventory to its present location and condition, typically including transportation charges.

LIFO Retail Inventory Method

An inventory costing method that assumes the last items placed in inventory are sold first, not necessarily reflecting the actual physical flow of merchandise.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus cost of goods sold.