Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Related questions
Question
On July 15, 2XX6, Liz converts 627,000 U.S. dollars to Japanese yen in the spot foreign exchange market (¥109.92/$) and purchase a six-month forward contract (¥100.89/$) to convert yen into dollars. What is Liz's profit or loss in U.S. dollars at the end of six months? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16). Use a negative sign to denote a loss.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps with 1 images
Knowledge Booster
Similar questions
- Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 100,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply: September 15 $0.60September 30 0.66October 15 0.62Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements.arrow_forward1. On May 1, Harris purchased parts from a Japanese company for a U.S. dollar-equivalent value of $8,400 to be paid on June 20. The exchange rates were May 1 June 20 2. On July 1, Harris sold products to a Brazilian customer for a U.S. dollar equivalent of $10,000, to be received on August 10. Brazil's local currency unit is the real. The exchange rates were July 1 August 10 Required: a. Assume that the two transactions are denominated in U.S. dollars. Prepare the entries required for the dates of the transactions and their settlement in U.S. dollars. b. Assume that the two transactions are denominated in the applicable LCUs of the foreign entities. Prepare the entries required for the dates of the transactions and their settlement in the LCUs of the Japanese company (yen) and the Brazilian customer (real). Answer is not complete. Complete this question by entering your answers in the tabs below. No Required A Required B Assume that the two transactions are denominated in the…arrow_forwardAarrow_forward
- Maloney Corporation has decided to speculate on the foreign exchange market, and has entered into a 6-month forward contract to sell 250,000 Mexican pesos. When the forward contract was acquired on October 1, 2012, the spot rate for the peso was $0.1601 and the 6-month future was $0.1639. On December 31, 2012, the spot rate was $0.1616 and the future rate was $0.1607. On April 1, 2013, the spot rate was $0.1650. Spot Rate Forward Rate 10/1/12 0.1601 0.1639 12/31/12 0.1616 0.1607 4/1/13 0.1650 Prepare the necessary journal entries to record the forward contract Journal…arrow_forwardBhupatbhaiarrow_forward7arrow_forward
- On November 6, 20X7, Zebra Corporation purchased merchandise from an unaffiliated foreign company for 50,000 units of the foreign company's local currency. On that date, the spot rate was $1.259. Zebra paid the bill in full three months later when the spot rate was $1.258. The spot rate was $1.255 on December 31, 20X7. What amount should Zebra report as a foreign currency transaction gain in its income statement for the year ended December 31, 20X7? O $50 O $150 O $0 O $200 (1arrow_forwardSuppose that you are a currency speculator, based in the U.S., att January 1st, the spot rate for the Canadian dollar is $0.68. This is have C$160,000.00 to use on these positions. Suppose that on February 10th, the Canadian dollar depreciates (a In order to purchase C$160,000.00 in spot market, you will need $107,200.00 alize on a possible depreciation of the Canadian dollar (C$). On t which futures contracts for Canadian dollars are being sold. You $139,360.00 $128,640.00 $150,080.00 d) to $0.67 in the spot market. (U.S. dollars) for the exchange.arrow_forwardOn October 15, 2009, Talud Limited, a Canadian company, sold a custom er in England for €10,000, when the exchange rate was €1 = $2.20. On December 31, 2009, the exchange rate at Talud's year-end was €1 = 2.25 and dropped to €1 = 2.10 on the settlement date, February 15, 2010. Record journal entries on the date of sale, year-end adjustment, and settlem ent date.arrow_forward
- Vikramarrow_forwardOn Mei 31, 2016, PT Risa sold the item to PT Bulan (functional currency is US $) for of the total $ 30,000 invoice by November 31, 2018. The functional currency of PT Risa is IDR , and the effective date is December 31st. Exchange rate between $ and IDR: Mei 31, 2016 ($1) : Spot rate = IDR 15,575 US$1 , Forward rate (6 months) = IDR 15,375 November 31, 2016 ($1) : Spot rate = IDR 14,250 PT Risa completed the forex risk hedging transaction on November 31, 2016 by signing a forward contract to sell US $ for $ 30,000. PT Risa also chose to apply fair value hedging accounting in accordance with PSAK71. prepare journal entries recorded by PT Risa on Mei 31, 2016 and November 31, 2016. Please explain !arrow_forwardA U.S. firm, sells merchandise today to a British company for £100,000. The current exchange rate is $1.38/£, the account is payable in three months, and the firm chooses to hedge by borrowing £98,765.43 today and exchanging the proceeds today for dollars; the loan will be paid back with the £100,000 accounts receivable (money market hedge). If Husky converted the borrowed pounds into dollars today and invested that amount at its WACC of 6% (1.5% for 90 days), how much much money in U.S. dollars will Husky Sporting Goods Company have in 90 days?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education