On december 1, 2013, keenan company, a u. s. firm, sold merchandise to velez company of canada for 150,000 canadian dollars (cad). collection of the receivable is due on february 1, 2014. keenan purchased a foreign currency put option with a strike price of $.97 (u. s.) on december 1, 2013. this foreign currency option is designated as a fair value hedge. relevant exchange rates follow:

date spot rate option premium
december 1, 2018 $0.97 $0.05
december 31, 2018 $0.95 $0.04
february 1, 2019 $0.94 $0.03

compute the fair value of the foreign currency option at february 1, 2014.
(a) $7,500.
(b) $6,000.
(c) $3,000.
(d) $1,500.
(e) $4,500.

You are an employee of an u. s. firm that produces personal computers in thailand and then exports them to the united states and other countries for sale. the personal computers were originally produced in thailand to take advantage of relatively low labor costs and a skilled workforce. other possible locations considered at that time were malaysia and hong kong. the u. s. government decides to impose punitive 100% ad valorem tariffs on imports of computers from thailand to punish the country for administrative trade barriers that restrict u. s. exports to thailand. how do you think your firm should respond? what does this tell you about the use of targeted trade barriers?

Match the given situations to the type of risks that a business may face while taking credit. 1. beta ltd. had taken a loan from a bank for a period of 15 years, but its sales are gradually showing a decline. 2. alpha ltd. has taken a loan for increasing its production and sales, but it has not conducted any research before making this decision. 3. delphi ltd. has an overseas client. the economy of the client’s country is going through severe recession. 4. delphi ltd. has taken a short-term loan from the bank, but its supply chain logistics are not in place. a. foreign exchange risk b. operational risk c. term of loan risk d. revenue projections risk

The smelting department of kiner company has the following production and cost data for november. production: beginning work in process 3,700 units that are 100% complete as to materials and 23% complete as to conversion costs; units transferred out 10,500 units; and ending work in process 8,100 units that are 100% complete as to materials and 41% complete as to conversion costs. compute the equivalent units of production for (a) materials and (b) conversion costs for the month of november. materials conversion costs total equivalent units