Levin company entered into a forward contract to speculate in the foreign currency. It sold 100,000 foreign currency units under a contract dated November 1, 20X8, for delivery on January 31, 20X9: 11/1/20X8 12/31/20X8 Spot rates $ 0.035 $ 0.037 30-day forward rate 0.034 0.036 90-day forward rate 0.033 0.035 In its income statement for the year ended December 31, 20X8, what amount of loss should Levin report from this forward contract? $0 $300 $200 $100

Levin company entered into a forward contract to speculate in the foreign currency. It sold 100,000 foreign currency units under a contract dated November 1, 20X8, for delivery on January 31, 20X9: 11/1/20X8 12/31/20X8 Spot rates $ 0.035 $ 0.037 30-day forward rate 0.034 0.036 90-day forward rate 0.033 0.035 In its income statement for the year ended December 31, 20X8, what amount of loss should Levin report from this forward contract? $0 $300 $200 $100

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 9QA

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Question 15

Levin company entered into a forward contract to speculate in the foreign currency. It sold 100,000 foreign currency units under a contract dated November 1, 20X8, for delivery on January 31, 20X9:

	11/1/20X8	12/31/20X8
Spot rates	$	0.035	$	0.037
30-day forward rate		0.034		0.036
90-day forward rate		0.033		0.035

In its income statement for the year ended December 31, 20X8, what amount of loss should Levin report from this forward contract?

		$0
		$300
		$200
		$100

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