Siam Financial Corp. (SFC) actively trades bonds but chooses not to hedge any of its open positions.

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Siam Financial Corp. (SFC) actively trades bonds but chooses not to hedge any of its open positions. At the beginning of the year, SFC purchased 50 million baht of Thai government bonds paying 4 percent per annum. The year-end fair market value of the bonds was 51 million baht. How much did the bonds contribute to SFC’s pretax income during the year? 

a. Nothing, because bonds are always carried at cost. 

b. 1 million baht. 

c. 2 million baht. 

d. 3 million baht.

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International Accounting

ISBN: 978-1260466539

5th edition

Authors: Timothy Doupnik, Mark Finn, Giorgio Gotti, Hector Perera

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