A 90-day forward-sale purchase contract will help to reduce or eliminate the risk facing the U.S. Firm.
<h3>What is a Forward sale Contract?</h3>
This refers to a special contract between two parties to purchase or sell an asset at an agreed price on a future date.
The fact that the price has been set and agreed upon protects the parties from fluctuations, which in this case, is exchange rate risks.
The correct answer, thus, is A.
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<span>Lower price increases the real incomes of buyers, enabling them to purchase more.</span>
Monopolists do not prefer to produce in the when the demand for a good produced by them is inelastic. Option B is the correct answer.
- It is common to observe that monopolists, avoid engaging production when the demand for their product becomes inelastic.
- In order to understand this situation, it is important to address the meaning of inelastic demand.
- The term 'inelastic demand' refers to a situation where the demand for a product does not increase/decrease (change) when there is an increase/decrease (change) in its price.
- This does not lead to profits for a monopolist.
- It is because, a firm will be able to secure profits by producing lower amounts of goods for a higher price when the demand is elastic.
- Hence, when the demand is inelastic, the increase in the quantity will be sold at the previous standard price, leading to a fall in terms of the total revenue.
Therefore, it is clear that a monopolist will not produce when the demand for a good is inelastic.
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Answer: the correct answer is $70000
Explanation: the fair value of the shares given plus the fair value of the contingent consideration is the total amount paid by the buyer which is (20000 shares * $10 price per share) = $200000+$10000= $210000.
The gain of the transaction is registered as the net fair value of the acquiree that is $350000-$70000= $280000 less the sum paid by the Acquirer that is $280000-$210000= $70000.
The $15000 in direct acquisition costs are registered as period expenses and not relevant for the calculation of the gain of the transaction.
