Reference no: EM132716561
Question 1: Which of the following statements is true regarding forward contracts, futures contracts, options and swaps?
Select one:
a. A forward contract can be purchased on the open market and is recorded at its historical cost, then adjusted for changes in the market.
b. A futures contract is negotiated between two parties who are betting in the opposite direction on the movement of the underlying price.
c. An option is a contract requiring the holder to either "put" or "call" an underlying asset at a specified point in time.
d. A swap is a contract between two parties to exchange an ongoing stream of cash flows.
Question 2: If the sale of the merchandise was denominated in Swiss francs, the November 30 entry to record the receipt of payment from Watchem included a:
Select one:
a. credit to Accounts Receivable for $104,040.
b. credit to Exchange Gain for $3,060.
c. debit to Cash for $107,100.
d. debit to Exchange Loss for $3,060.
Question 3: If the sale of merchandise is denominated in dollars, the November 30 entry to record receipt of the payment from Watchem included a:
Select one:
a. credit to Accounts Receivable for $104,040.
b. credit to Exchange Gain for $3,060.
c. debit to Cash for $107,100.
d. debit to Exchange Loss for $3,060.