45.

When an economic transaction is denominated in currency, the entity must establish a

currency other than the entity's domestic.
a. domestic rate. C. rate of currency change.
b. hedge rate. d. rate of exchange.

46. Which of the following factors influences the spread between forward and spot rates?
a. which currency is denominated as the domestic currency b. the length
of the forward exchange contract
c. the current cross rate between the two currencies
d. all are factors that may influence the spread

47. A forward exchange contract is being transacted at a premium if the current forward rate is:
a. less than the expected spot rate.
b. greater than the expected spot rate.
c. less than the current spot rate.
d. greater than the current spot rate.

48. Foreign currency transactions not involving a hedge should be accounted for using
a. the one-transaction method.
b. the two-transaction method.
c. a hybrid of the one- and two-transaction methods
d. either the one- or the two-transaction method

49. A transaction involving foreign currency will most likely result in gains and losses to the
reporting entity if the
a. forward exchange contract is selling at a premium.
b. transaction is denominated and measured in the reporting entity's currency
c. transaction takes place in a country with a tiered monetary system.
d. transaction is denominated in a foreign currency and measured in the reporting
entity's currency.

50. The number of types of forward contracts for which the established standards requires:
a. Three C. Five
b. Four d. Six