5th Edition

ISBN: 9781307409376

Author: Doupnik

Publisher: MCG/CREATE

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Textbook Question

Chapter 5, Problem 11EP

Siam Financial Corp. (SFC) actively trades bonds but chooses not to hedge any of its open positions. At the beginning of the year, SFC purchased 50 million baht of Thai government bonds paying 4 percent per annum. The year-end fair market value of the bonds was 51 million baht. How much did the bonds contribute to SFC’s pretax income during the year?

a. Nothing, because bonds are always carried at cost.
b. 1 million baht.
c. 2 million baht.
d. 3 million baht.

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Solution Summary: The author calculates the contribution of the bonds in the Corporation SF pretax income during the year.

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