Cases is exempt from transaction exchange risk

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Reference no: EM131984062

1. Which of the following cases is exempt from transaction exchange risk? ______________. (Note: euro is under flexible exchange rate system

(a) IBM is scheduled to receive euros for exports to a German software company.

(b) Bid-ask spread of USD/EUR will differ based on the bank's currency needs for Euros and US dollars.

(d) The current spot spread of USD/EUR is wider than the 90-day forward bid-ask spread of USD/EUR.

2. On January? 1, 2016 ?, Educators Credit Union ?(ECU ?) issued 8 % ?, 20 ?-year bonds payable with face value of $ 700,000 . The bonds pay interest on June 30 and December 31. The issue price of the bonds is 106 . Journalize the following bond? transactions:

a. Issuance of the bonds on January? 1, 2016.

b. Payment of interest and amortization on June? 30, 2016.

c. Payment of interest and amortization on December? 31, 2016.

d. Retirement of the bond at maturity on December? 31, 2035.

Reference no: EM131984062

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