Chapter

1a Net exposure = ¥300 million.

1b Potential exchange loss = +$1 million.

1c Potential exchange gain = $0.5 million.

2a Net exposed assets = £2 million.

2b Potential exchange loss = -$0.4 million.

3b Dollar net income = $100.

3c Translation gain under FASB 8 = $75.

Translation gain under FASB 52 = $175.

4b $878 million.

4c $615 million.

5a Exchange rate = 2.20.

5b Either direct loan or credit swap.

5 c Credit swap.

5d Exchange rate = 2.095238.

Chapter

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