Business, 09.04.2020 22:58 klairecarregal6016

On December 1, 2001 Pimlico made sales to a customer in India and recorded Accounts Receivable of 10,000,000 rupees. The customer has until March 1, 2002 to pay. On December 1, 2001, Pimlico paid $500 for a put option to sell rupees at a strike price of $2.30 per 100 rupees on March 1, 2002, which was the spot rate on December 1, 2001. On December 31, 2001, the spot rate was $2.80 per 100 rupees and the option premium was $0.004 per 100 rupees.

What is the fair value of the option on December 1, 20x1?

a. $0
b. $500
c. $400
d. $10,000

What is the fair value of the option on December 31, 20x1?

a. $0
b. $500
c. $400
d. $10,000

What is the foreign currency exchange gain or loss on December 31, 20x1?

a. $50,000 loss
b. $50,000 gain
c. $10,000 gain
d. $10,000 loss

If the spot rate on March 1, 20x2 was $2.45 per 100 rupees, what is the foreign currency exchange gain or loss that should be recorded that day?

a. $15,000 gain
b. $15,000 loss
c. $35,000 gain
d. $35,000 loss

Answers: 3

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On December 1, 2001 Pimlico made sales to a customer in India and recorded Accounts Receivable of 10...

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