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eimsori [14]
3 years ago
10

Kalons, Inc. is a U.S.-based MNC that frequently imports raw materials from Canada. Kalons is typically invoiced for these goods

in Canadian dollars and is concerned that the Canadian dollar will appreciate in the near future.
Which of the following is not an appropriate hedging technique under these circumstances?
a. purchase Canadian dollars forward.
b. purchase Canadian dollar futures contracts.
c. purchase Canadian dollar put options.
d. purchase Canadian dollar call options.
Business
1 answer:
pantera1 [17]3 years ago
5 0

Answer:

The correct answer is C) purchase Canadian dollar put options.

Explanation:

A sale option (or put option) gives its holder the right - but not the obligation - to sell an asset at a predetermined price until a specific date. The seller of the option to sell has the obligation to buy the underlying asset if the holder of the option (buyer of the right to sell) decides to exercise his right.

The purchase of put options is used as hedging, when price falls are anticipated in shares that are held, since by means of the purchase of Put the price is established from which money is earned. If the stock falls below that price, the investor earns money. If the share price falls, the profits obtained with the sale option compensate in whole or in part for the loss experienced by said fall.

Losses are limited to the premium (price paid for the purchase of the sale option). Earnings increase as the share price falls in the market.

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A retail store has three departments, S, T, and U, and does general advertising that benefits all departments. Advertising expen
Andrew [12]

Answer: $22,500

Explanation:

First calculate the rate of allocation based on sales to determine how much of Department T's sales should be attributed to Advertising.

The Rate of Allocation based on Sales = Advertising Expense/Total sales

= 50,000/475,000

= 0.105263

= 10.5263%

This 10.5% can then be used to find out how much of Advertising to apportion to Department T based on department sales,

= Department sales * Allocation rate

= 213,750 * 10.5263%

= $22,500

$22,500 should be allocated to Department T.

8 0
3 years ago
On January 2, year 1, Lava, Inc. purchased a patent for a new consumer product for $90,000. At the time of purchase, the patent
Archy [21]

Answer:

The amount Lava should charge against income during year 4 is $63,000.

Explanation:

Since amortization is assumed to be recorded at the end of each year, this can be calculated as follows:

Annual amortization expense = Cost of the patent  / Patent's estimated useful life = $90,000 / 10 = $9,000

Amortization expense recorded prior to year 4 = Annual amortization expense * 3 years =  $9,000 * 3 = $27,000

Unamortized cost of patent charge against income during year 4 = Cost of the patent - Amortization expense recorded prior to year 4 = $90,000 - $27,000 = $63,000

Therefore, the amount Lava should charge against income during year 4 is $63,000.

4 0
2 years ago
What are the benefits of hiring a teenage worker?
stealth61 [152]
Seen as it may be 1 of there first jobs you can pay them less because they don't have as much experience as someone has has worked in the job for years
3 0
3 years ago
Read 2 more answers
11. What are assets?
vampirchik [111]
Financial accounting, an asset is any resource owned by a business or an economic entity. It is anything that can be owned or controlled to produce value and that is held by an economic entity and that could produce positive economic value.
I hope this helps
7 0
3 years ago
Read 2 more answers
A competitive firm currently produces and sells 7,500 units of output at a price of $2.50 per unit. The firm's average fixed cos
saveliy_v [14]

Answer:

A. $-2,250

B. The firm should continue to operate in the short run because price is greater than average variable cost

C.The firm should exit in the long run because it is making losses

D. In the long run, prices would increase because in a competitive firm, price must equal average cost. As firms exit the industry, supply would fall and this would lead to an excess of demand over supply. As a result, price would rise

Explanation:

A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.

In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.

Profit = Total revenue - Total cost

( $2.50 -  $2.80) × 7,500 = $-2,250

The firm is earning a loss

A firm should shutdown in the short run if price is less than average variable cost.

Average variable cost = average total cost- average total cost

 $2.80 - $0.75 = $2.05

2.50 > 2.05 so the firm should continue to operate in the short run.

The firm should exit in the long run because it is making losses

In the long run, prices would increase because in a competitive firm, price must equal average cost

I hope my answer helps you.

3 0
3 years ago
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