Business, 27.03.2020 01:55 dre2544

1. A U. S. company anticipates that it will purchase merchandise for €100,000 at the end of August and pay for it at the time the merchandise is delivered. On May 1, when the spot rate is $1.20 and the forward rate for delivery on August 30 is $1.21, the company enters a forward contract to buy €100,000 on August 30. The forward contract qualifies as a cash flow hedge of the forecasted purchase. The company purchases the merchandise on August 30, when the spot rate is $1.232, and closes the forward contract and pays the supplier €100,000. The company sells the merchandise in October. The company has a December 31 year-end. As of August 30, the effect of the above events on other comprehensive income is: A. $3,200 net gain B. $0 C. $2,200 net loss D. $2,200 net gain

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1. A U. S. company anticipates that it will purchase merchandise for €100,000 at the end of August a...

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