Question

Forop Ltd. is a foreign subsidiary of Domop Inc. Domop’s accounting exposure to exchange rate changes when translating the accounts of Forop is a substantial net liability exposure. Domop’s management expects the foreign currency in which Forop operates to increase in value relative to the Canadian dollar; such an increase will result in a large translation loss. The management of Domop proposes to enter into a forward contract to receive an equivalent amount of foreign currency to hedge against the potential translation loss. Would you recommend that Domop’s management follow their proposed course of action? Explain.



$1.99
Sales0
Views71
Comments0
  • CreatedMarch 13, 2015
  • Files Included
Post your question
5000