Question: Explain why a difference usually exists between a currency s spot
Explain why a difference usually exists between a currency's spot rate and forward rate. Give two reasons this difference is usually positive when a company enters into a contract to receive foreign currency at a future date.
Answer to relevant QuestionsA forward exchange contract may be used (a) To manage an exposed foreign currency position, (b) To hedge an identifiable foreign currency commitment, (c) To hedge a forecasted foreign currency transaction, or (d) To ...Rainy Day Insurance Company maintains an extensive portfolio of bond investments classified as available-for-sale securities under ASC 320. The bond investments have a variety of fixed interest rates and have maturity dates ...On December 1, 20X1, Rone Imports, a U.S. company, purchased clocks from Switzerland for 15,000 francs (SFr) to be paid on January 15, 20X2. Rone's fiscal year ends on December 31, and its reporting currency is the U.S. ...Jerber Electronics Inc. sold electrical equipment to a Dutch company for 50,000 guilders (G) on May 14, with collection due in 60 days. On the same day, Jerber entered into a 60 day forward contract to sell 50,000 guilders ...Part IMaple Company had the following export and import transactions during 20X5:1. On March 1, Maple sold goods to a Canadian company for C$30,000, receivable on May 30. The spot rates for marks were C$1 = $0.65 on March 1 ...
Post your question