Time value: Time value is the difference between the spot and forward or change in contract value and change in intrinsic value. The contract has no intrinsic value since the spot rate on July 31 is greater than the spot rate on June 30 . Hence, the contact value should be traceable to time value. To calculate: The change in value of the inventories and gain/loss on future contracts for the fair value hedges.

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Answer 1

Question

Chapter 9.M, Problem 2E

To determine

Time value:

Time value is the difference between the spot and forward or change in contract value and change in intrinsic value.

The contract has no intrinsic value since the spot rate on July 31 is greater than the spot rate on June 30 . Hence, the contact value should be traceable to time value.

To calculate:

The change in value of the inventories and gain/loss on future contracts for the fair value hedges.

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Answer 2

Question

Chapter 9.M, Problem 2E

To determine

Time value:

Time value is the difference between the spot and forward or change in contract value and change in intrinsic value.

The contract has no intrinsic value since the spot rate on July 31 is greater than the spot rate on June 30 . Hence, the contact value should be traceable to time value.

To calculate:

The change in value of the inventories and gain/loss on future contracts for the fair value hedges.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 9.M, Problem 2E

To determine

Time value:

Time value is the difference between the spot and forward or change in contract value and change in intrinsic value.

The contract has no intrinsic value since the spot rate on July 31 is greater than the spot rate on June 30 . Hence, the contact value should be traceable to time value.

To calculate:

The change in value of the inventories and gain/loss on future contracts for the fair value hedges.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 9.M, Problem 2E

To determine

Time value:

Time value is the difference between the spot and forward or change in contract value and change in intrinsic value.

The contract has no intrinsic value since the spot rate on July 31 is greater than the spot rate on June 30 . Hence, the contact value should be traceable to time value.

To calculate:

The change in value of the inventories and gain/loss on future contracts for the fair value hedges.

Expert Solution & Answer

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Answer 5

Chapter 9.M, Problem 2E

To determine

Time value:

Time value is the difference between the spot and forward or change in contract value and change in intrinsic value.

The contract has no intrinsic value since the spot rate on July 31 is greater than the spot rate on June 30 . Hence, the contact value should be traceable to time value.

To calculate:

The change in value of the inventories and gain/loss on future contracts for the fair value hedges.

Answer 6

Chapter 9.M, Problem 2E

To determine

Time value:

Time value is the difference between the spot and forward or change in contract value and change in intrinsic value.

The contract has no intrinsic value since the spot rate on July 31 is greater than the spot rate on June 30 . Hence, the contact value should be traceable to time value.

To calculate:

The change in value of the inventories and gain/loss on future contracts for the fair value hedges.

Answer 7

Chapter 9.M, Problem 2E

To determine

Time value:

Time value is the difference between the spot and forward or change in contract value and change in intrinsic value.

The contract has no intrinsic value since the spot rate on July 31 is greater than the spot rate on June 30 . Hence, the contact value should be traceable to time value.

To calculate:

The change in value of the inventories and gain/loss on future contracts for the fair value hedges.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 9.M - Prob. 1UTI Ch. 9.M - Prob. 2UTI Ch. 9.M - Prob. 3UTI Ch. 9.M - Prob. 4UTI Ch. 9.M - Prob. 5UTI Ch. 9.M - Prob. 1E Ch. 9.M - Prob. 2E Ch. 9.M - Prob. 3E Ch. 9.M - Prob. 4.1E Ch. 9.M - Prob. 4.2E

Solution Summary: The author explains that time value is the difference between the spot and forward or change in contract value and change of intrinsic value.

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Chapter 9 Solutions