Hello, please help with letter a. Thank you 1) ABC Corp has Accounts Receivable of FC 400,000 and Accounts Payable FC 300,000 on both March 31 and April 30, 2010. The applicable exchange rates at that date were as follows: March 30 April 30 Spot rate 1FC = .35 US 1FC = .37 US Forward rate(1 month). 1FC= .36 US. 1FC= .39 US a) What is the FX transaction gain or loss on Accounts REeceivable on April 30, 2010?
Hello, please help with letter a.
Thank you
1) ABC Corp has Accounts Receivable of FC 400,000 and Accounts Payable FC 300,000 on both March 31 and April 30, 2010. The applicable exchange rates at that date were as follows:
March 30 April 30
Spot rate 1FC = .35 US 1FC = .37 US
Forward rate(1 month). 1FC= .36 US. 1FC= .39 US
a) What is the FX transaction gain or loss on Accounts REeceivable on April 30, 2010?
b) What is the FX transaction gain or loss on Accounts Payable on April 30, 2010?
c) If on March 31, ABC wishes to hedge its exposure to changing exchange rates what is the appropriate action it will take. Answer by saying whether ABC will enter a spot contract or forward contract and say whether the contract will involve purchasing FC and selling US dollars, or purchasing US dollards and selling FC and specify the appropriate exchange rate.
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