ABC Co. expects the value of yens to decrease in the next 30 days.Accordingly, on December 15, 20x1, ABC Co. enters into a 30-dayforward contract to sell 4,000,000 yens at the forward rate of PO.47.On December 31, 20x1, the forward rate was PO.485 and byJanuary 15, 20×2, the spot rate moved to PO.46.10) The entry to record the forward contract on December 15,20x1 includesa. a debit to forward contract for P60,000b. a credit to forward contract for P60,000C. a debit to loss on forward contract for P60,000d. none11) How much is the gain (loss) on change in fair value of thederivative on December 31, 20x1?a. 60,000 in profit or lossb. (60,0000) in OCIC. (40,000) in OCId. (60,000) in profit or loss12) The derivative asset (liability) to be included in the December31, 20x1 statement of financial position isa. 1,960,000b. (1,920,000)c. 60,0000d. (60,000)13) How much is the gain (loss) on change in fair value of thederivative on January 15, 20x2?a. 120,000b. (120,000)c. 100,000d. (100,000)14) How much is the net cash settlement receipt (payment) onJanuary 15, 20x2?a. 40,000b. (40,000)C. 1,840,000d. (1,840,000

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates: Spot exchange rate: Yen 106/$ U.S. dollar interest rate per annum 10% Japanese Yen interest rate per annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates.If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: 1) What would the spot exchange rate (Yen/$) be in 90 days? 2) Would Ari make a profit by borrowing 1 million US dollar and investing in the money markets? If yes, how much profit would Ari realise in 90 days? If no, explain why. Please answer 2). Thanks
In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market ratesSpot exchange rate: Yen 106/$U.S. dollar interest rate per annum 10%Japanese Yen interest rate per annum 6%and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: Would Ari make a profit by borrowing 1 million US dollar and investing in the money markets? If yes, how much profit would Ari realize in 90 days?If no, explain why.
am. 216.
In May 1997, George Soros started shorting the Thai Baht for the U.S.. dollar with a forward contract. As a result, the Thai Baht exchange rate. moved from 30 Bahts per dollar (May 1, 1997) to 31 Bahts per dollar (May 31, 1997) in a month. If George Soros had a short position of 9,000,000 Bahts forward contract at forward rate F1(Baht/$) = 45 on May 1, 1997, then his profit/loss in the forward trading would be $_ on May 31, 1997. (Please keep the sign and two decimal places.)
The average rate of return on a 182-day Government of Canada treasury bill sold on June 18, 2021, was 1.03%. A client sold the $100,000 T-bill after 69 days. What rate of return (per annum) did the client realize while holding the T-bill, if the short-term interest for this maturity had risen to 1.15% by the date of sale? Do not include the dollar sign in your answer. Do not include the comma usually used to denote thousands. Do not include the percent sign in your answer. a.) How much did the client pay for the T-bill on its issue date? b.) How much did the client sell the T-bill for? c.) What rate of return did the client realize on the T-bill? (Correct to exactly 4 decimal places.)
Kk.233.
Black Panther Inc. buys on terms of 2/15, net 60 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to P450,000 per year. On average, how much “free" trade credit does the firm receive during the year? (Assume a 365-day year, and note that purchases are net of discounts.) * O P19,418 P20,389 P21,408 P22,479 P18,493
ss. Suppose you take a short position in 15-Russian ruble contracts at a price of $0.010125/RUB on the CME (Ruble contract consists of 2,500,000 rubles). Prices over the next two days are $0.010055/RUB and $0.009920/RUB. If your initial performance margin was $110,000, what is its value after two days of marking-to-market?
Suppose, Company ABC is U.S. based company and has a British subsidiary. It is expected that the subsidiary will send 10 million pounds in two months to the Company. Thus, Company ABC is concerned that in the next two months the pound will depreciate in value. A Firm buys an FRA on 90-day LIBOR expiring in 30 days with Notional principal of $20 million. The contract rate is 10%. If at expiration, LIBOR is 8%, how much will the long has to pay to the short i.e., seller of FRA. What happens if at expiration, LIBOR is 12%?
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