Business, 26.03.2020 22:42 unknown9263

1. A U. S. company borrows €100,000 by issuing bonds to German investors when the spot rate is $1.25/€. The interest rate is 3 percent per annum. Which of the following is false concerning the U. S. company's accounting for this loan? A. If the spot rate falls to $1.23 one year later, the company will report the bonds payable at $123,000. B. If the euro weakens against the U. S. dollar there will be an exchange loss on the bonds payable. C. If the spot rate falls to $1.20/€ one year later, when the interest payment is accrued, the interest expense will be recorded at $3,600. D. The company can hedge these bonds by entering a forward purchase contract for euros.

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1. A U. S. company borrows €100,000 by issuing bonds to German investors when the spot rate is $1.25...

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