Explain in what sense insurance policy on its receivable

Assignment Help Finance Basics
Reference no: EM131114438

Suppose your company has purchased a put option on the euro to manage exchange exposure associated with an account receivable denominated in that currency. In this case, your company can be said to have an "insurance" policy on its receivable. Explain in what sense this is so.

Reference no: EM131114438

Questions Cloud

What are factors to be considered in estimating : What are factors to be considered in estimating the useful life of an intangible asset?
How should this expenditure be reported : In 2010 Ghostbusters Corp. spent $420,000 for "goodwill" visits by sales personnel to key customers.
Why does the accounting profession make a distinction : Why does the accounting profession make a distinction between internally created intangibles and purchased intangibles?
Intangibles have either a limited useful life : Intangibles have either a limited useful life or an indefinite useful life. How should these two different types of intangibles be amortized?
Explain in what sense insurance policy on its receivable : Suppose your company has purchased a put option on the euro to manage exchange exposure associated with an account receivable denominated in that currency. In this case, your company can be said to have an "insurance" policy on its receivable. Explai..
How is the cost of the intangible determined : If intangibles are acquired for stock, how is the cost of the intangible determined?
What are the two main characteristics of intangible assets : What are the two main characteristics of intangible assets?
What are the advantages of a currency options contract : What are the advantages of a currency options contract as a hedging tool compared with the forward contract?
Identify the major stakeholders : If Wilkens Company was using the FIFO method of inventory costing, would Lenny Wilkens give the same order? Why or why not?

Reviews

Write a Review

Finance Basics Questions & Answers

  Explain the following beneficiary designations

Explain the following beneficiary designations. a. Primary and contingent beneficiary

  Calculate the premium on the bonds

The bonds were subordinated debentures, and they were given an A rating; straight nonconvertible debentures of the same quality yielded about 83⁄4 percent at the time Roop's bonds were issued.a. Calculate the premium on the bonds, that is, the percen..

  Why are equity earnings usually greater than cash flow

Why are equity earnings usually greater than cash flow generated from the investment? How can these equity earnings distort profitability analysis?

  What will a, e, and d be after the change to the capital

Suppose that Ms. Macbeth's investment bankers have informed her that since the new issue of debt is risky, debt holders will demand a return of 12.5%

  What is the value of tax shields in each period

Such a capital cost is depreciated to zero with the straight-line method. Assume a 34% corporate tax rate and a discount rate of 10%.

  The risk-free rate is 47 the market risk premium is 6 and

the risk-free rate is 4.7 the market risk premium is 6 and the stocks beta is 1.67. what is the cost of common stock

  Aspect of using networking

Question 1: A key aspect of using networking as a career tactic is that a person should:

  What are the three key inputs to the valuation process

What are the three key inputs to the valuation process?

  Using the sample financial statements create pro forma

decide upon an initiative you want to implement that would increase sales over the next five years for example market

  Calculate present value of the growth opportunity

Winter Corporation is expected to pay a dividend or $4.00 per share out of earnings of $7.50 per share. If the required rate of return on the stock is 15 percent and dividends are growing at a current rate of 10% per year.

  Expected return for investing in a stock in france

You are a US who is considering investment in French (stocks A and B) and Swiss (stocks C and D) stock markets. The World market risk premium is 6%.

  Is considering factoring its receivables

(Cost of factoring) MDM Inc. Is considering factoring its receivables. The firm has credit sales of $450,000 per month and has an average receivables balance of $900,000 with 60-day credit terms. The factor has offered to extend credit equal to..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd