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.