The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase. The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings. Characters in the case: Company AP Person TC To discuss: The reason why the AP Company did not fully hedge its foreign exchange exposure to avoid a knockout on earnings. Introduction: A value of one country’s currency is used to convert into another country’s currency is termed as an exchange rate . The rate of exchange can be either floating or fixed.

Question

Want to see the full answer?

Answer 1

Question

Chapter 10, Problem 2CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the AP Company did not fully hedge its foreign exchange exposure to avoid a knockout on earnings.

Introduction:

A value of one country’s currency is used to convert into another country’s currency is termed as an exchange rate. The rate of exchange can be either floating or fixed.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

I need assistance with this general accounting question using appropriate principles.

I am looking for the correct answer to this general accounting problem using valid accounting standards.

Financial Accounting Question please answer

Answer 2

Question

Chapter 10, Problem 2CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the AP Company did not fully hedge its foreign exchange exposure to avoid a knockout on earnings.

Introduction:

A value of one country’s currency is used to convert into another country’s currency is termed as an exchange rate. The rate of exchange can be either floating or fixed.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 10, Problem 2CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the AP Company did not fully hedge its foreign exchange exposure to avoid a knockout on earnings.

Introduction:

A value of one country’s currency is used to convert into another country’s currency is termed as an exchange rate. The rate of exchange can be either floating or fixed.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 10, Problem 2CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the AP Company did not fully hedge its foreign exchange exposure to avoid a knockout on earnings.

Introduction:

A value of one country’s currency is used to convert into another country’s currency is termed as an exchange rate. The rate of exchange can be either floating or fixed.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 10, Problem 2CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the AP Company did not fully hedge its foreign exchange exposure to avoid a knockout on earnings.

Introduction:

A value of one country’s currency is used to convert into another country’s currency is termed as an exchange rate. The rate of exchange can be either floating or fixed.

Answer 6

Chapter 10, Problem 2CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the AP Company did not fully hedge its foreign exchange exposure to avoid a knockout on earnings.

Introduction:

A value of one country’s currency is used to convert into another country’s currency is termed as an exchange rate. The rate of exchange can be either floating or fixed.

Answer 7

Chapter 10, Problem 2CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the AP Company did not fully hedge its foreign exchange exposure to avoid a knockout on earnings.

Introduction:

A value of one country’s currency is used to convert into another country’s currency is termed as an exchange rate. The rate of exchange can be either floating or fixed.

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

Ch. 10.5 - Prob. 1DYK Ch. 10 - Prob. 1CTD Ch. 10 - Prob. 2CTD Ch. 10 - Prob. 3CTD Ch. 10 - Prob. 4CTD Ch. 10 - Prob. 5CTD Ch. 10 - Prob. 1CDQ Ch. 10 - Prob. 2CDQ Ch. 10 - Prob. 3CDQ Ch. 10 - Prob. 4CDQ

Solution Summary: The author explains that the AP Company reported a loss of 5 billion in their revenue during the fourth quarter of 2016 due to exchange rates changes.

Want to see the full answer?

Chapter 10 Solutions