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What is contract gain or loss on hedge on exposed position

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Reference no: EM133105028

Question - On June 1 2014 A Manufacturing corporation received raw materials from a foreign vendor when the spot rate is Php40. Payment of 100,000 foreign currency is due in 90 days. On the same date the company acquired forward contract to buy 120,000 foreign currency in 90 days. The following forward rates per foreign currency is available:

June 1, 90-day rate P40.30

June 30, 60-day rate 40.4

July 31, 30-day rate 40.1

Required -

1. What is the contract gain or loss on hedge on an exposed position?

2. What is the exchange gain or loss on a speculative contract in June 2014?

Reference no: EM133105028

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