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Chapter 07
Foreign Currency Transactions and Hedging Foreign Exchange Risk
Multiple Choice Questions
1. According to the World Trade Organization, what was the size of international trade in 2011?
A. $7,000,000,000 (7 billion dollars)

B. $70,000,000,000 (70 billion dollars)
C. $37,000,000,000 (37 billion dollars)
D. $18,000,000,000,000 (18 trillion dollars)
2. In the years between 1990 and 2001 when global gross domestic product rose 27%, what was
the growth in global exports?
A. 25%
B. 75%
C. 35%
D. 50%
3. What is a "foreign exchange rate?"
A. The price to buy a foreign currency

B. The price to buy foreign goods
C. The difference between the price of goods in a foreign currency and the price in a
domestic currency
D. The cost to hold all monetary assets in a single currency
7-1
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
4. Which of the following statements is true about the Euro?
A. It is the currency used by all countries in the European Union.

B. It is pegged to the U.S. dollar.
C. It is the currency required to be used in financial reporting under international accounting
standards.
D. None of the statements above is true.
5. A bank exchanging foreign currency makes its profit in what manner?
A. On the difference between the spot rate and the foreign rate
B. A bank is forbidden, by law, to charge a premium in foreign currency exchange
C. On the present value of the forward rate discounted to the date an option is purchased
D. On the difference between the buying and selling rates
6. King's Bank, a British company, purchases market research services from Harris Interactive, a
U.S. company. As per the terms of the contract, payment is to be made three months later in
U.S. dollars when the report is delivered. How would King's Bank like to see the exchange
rate move, assuming it isn't hedging the transaction?
A. It hopes that the U.S. dollar appreciates in value against the British pound.
B. It hopes that the British pound appreciates in value against the U.S. dollar.
C. It makes no difference, since they are the customer and the sale takes place in the U.K.
D. It hopes that there is no change between the spot rate and the forward rate.
7. Why was there very little fluctuation in the foreign exchange rate in the period 1945-1973?
A. This was a period when the world economy was very stable.
B. There was very little growth in the world economy between 1945 and 1973.
C. Countries linked their currency to the U.S. dollar, which was backed by gold reserves.
D. Most currencies were pegged to the British pound, which could be converted to sterling
silver.
7-2
8. The central bank of Country X buys and sells its own currency to ensure that the currency is
always exchanged in a ratio of 2:1 with the currency of Country Y. What can we conclude
about these two currencies?
A. Country X is using the Euro.

B. Country X has pegged its currency to the currency of Country Y.
C. Country X has an undesirable currency.
D. Country X allows its currency to float relative to the currency of Country Y.
9. When a currency is allowed to increase or decrease freely according to market forces, the
currency is said to:
A. be pegged to another currency.

B. be less valuable.
C. have independent float.
D. devalue.
10. For an upcoming trip, Pat wants to buy Euros at the local bank when the current exchange
rate quoted on OANDA.com was $1.563 per €1. What should Pat plan to pay for €1,000?
A. exactly $1,563
B. more than $1,563
C. about $640
D. less than $640
11. The number of Japanese yen (¥) required today to buy one U.S. dollar ($) today is called:
A. the spot rate.

B. the exact rate.
C. the forward rate.
D. the retail rate.
7-3
12. The number of U.S. dollars ($) today to buy one U.K. pound (£) six months from now is
called:
A. the spot rate.

B. the exact rate.
D. the prime rate.
13. What is foreign exchange risk exposure?
A. The possibility of a loss because of changes in the value of a foreign currency

B. Losses caused by paying for purchased goods in a foreign currency
C. Losses caused by receiving payment in a foreign currency for goods sold
D. All of the above
14. What is "asset exposure" to foreign exchange risk?
A. The possibility that an asset denominated in domestic currency will decline in value
because of changes in the foreign exchange rate
B. The possibility that an asset denominated in a foreign currency will change in value
because of a change in the foreign exchange rate
C. The loss resulting from an import purchase when a foreign currency appreciates
D. The loss resulting from an import purchase when a foreign currency depreciates
15. What is a foreign currency transaction?
A. It is another name for an international transaction.

B. It is a transaction that involves payment at a date sometime in the future.
C. It is a business deal denominated in a currency other than a company's domestic currency.
D. It is an economic event measured in a currency other than U.S. dollars.
7-4
16. Under U.S. GAAP, what method is required to account for foreign currency transactions?
A. A one-transaction perspective must be used.

B. The two-transaction perspective must be used.
C. A sale is not recorded until payment is received and converted to U.S. dollars.
D. A sale is not recorded until payment is received in the foreign currency.
17. Under International Accounting Standards Board rules, what method is required to account
for foreign currency transactions?

18. Why must the two-transaction perspective be used for recording foreign currency
transactions under U.S. GAAP?
A. The two-transaction perspective is required under IFRS.

B. U.S. GAAP requires conservatism in financial reporting.
C. All other methods are excessively complicated to use and therefore obscure the essence of
the transaction.
D. Management made two decisions: one to sell and another to extend credit in a foreign
currency.
19. Under U.S. GAAP, foreign exchange losses should be recorded by:
A. debiting "Foreign Exchange Loss".

B. crediting "Foreign Exchange Loss".
C. debiting "Retained Earnings".
D. debiting "Sales Revenue".
7-5
20. Under U.S. GAAP, what is the proper treatment of unrealized foreign exchange losses?
A. They should be deferred on the Balance Sheet until the cash is paid.
B. They should not be recognized until cash is received to complete the transaction.
C. They should be recorded on the Income Statement in the period the exchange rate
changes.
D. They should be deferred on the Balance Sheet until an offsetting foreign exchange gain is
realized.
21. Under U.S. GAAP, what is the proper treatment of unrealized foreign exchange gains?
A. They should be deferred on the Balance Sheet until cash is received.

B. The principle of conservatism requires that they should never be recognized.
C. They should not be recorded until cash is received and the exchange transaction is
completed.
D. They should be recognized in income on the date the exchange rate changes.
22. Why is the accrual method of accounting for unrealized foreign exchange gains sometimes
criticized?
A. Foreign exchange gains almost never occur, so there is no reason to have an accounting
standard for it.
B. It violates the principle of conservatism.
C. It is not objective.
D. There is no reliable method for measuring unrealized foreign exchange gains.
7-6
23. How should U.S. companies record receivables and payables from international trade that are
denominated in foreign currencies?
A. All assets and liabilities of U.S. companies must be recorded in U.S. dollars.
B. Conservatism would dictate that liabilities should be recorded in the currency in which
they are payable, but assets should be recorded in U.S. dollars, regardless of what
currency will be received.
C. There should be separate receivable and payable accounts for each currency that is used
by the company.
D. The company should choose any one currency to use for recording receivable and
payables so that there is consistency in the accounts.
24. Northland Corporation recorded £1,000,000 in Accounts Receivable for sales to customers in
the United Kingdom and recorded Accounts Payable of 2,000,000 Yuan for product purchased
from China. If Northland recorded a foreign currency exchange loss on its receivables and a
foreign currency gain on its payables, what must have happened to each currency?
A. Yuan appreciated, Pound depreciated

B. Yuan depreciated, Pound appreciated
C. Yuan appreciated, Pound appreciated
D. Yuan depreciated, Pound depreciated
25. A noncancelable sales order that specifies foreign currency price and date of delivery is
known as a:
A. hedge.
B. foreign currency firm commitment.
C. forward contract.
D. put option.
7-7
Amazing Corporation, a U.S. enterprise, sold product to a customer in Wales on October 1,
20x1 for £100,000 with payment required on April 1, 20x2. Relevant exchange rates are:
The discount factor corresponding to the company's incremental borrowing rate for 6 months
is 0.95.
26. Assuming that Amazing Corporation does not hedge this transaction, what is the amount of
exchange gain or loss that it should show on its December 31, 20x1 income statement?
A. Loss $1,000
B. Loss $2,000
C. Gain $1,000
D. Gain $1,900
27. Assume that Amazing Corporation enters a forward contract on October 1, 20x1 to sell
£100,000 six months hence, on April 1, 20x2. How should Amazing Corporation report the
forward contract on its December 31, 20x1 financial statements?
A. Asset $1,950
B. Liability $1,950
C. Asset $1,000
D. Asset $950
28. What term is used to describe the circumstances under which Amazing Corporation is
entering the forward contract?
A. Hedge of an unrecognized foreign currency firm commitment

B. Hedge of a recognized foreign-currency-denominated asset
C. Hedge of a forecast foreign-currency-denominated transaction
D. Hedge of net investment in foreign operations
7-8
On November 1, 20x1 Zamfir Company, a U.S. corporation, purchased minerals from a
Russian company for 2,000,000 rubles, payable in 3 months. The relevant exchange rates
between the U.S. and Russian currencies are given:
The company's incremental borrowing rate provides a discount rate of 0.975 for three
months.
29. If Zamfir does not attempt to hedge this transaction, what is the gain or loss that should be
shown on the company's December 31, 20x1 financial statements?
A. $22,000 loss
B. $21,450 loss
C. $8,000 gain
D. $7,800 gain
30. Assume that on November 1, 20x1 Zamfir Company enters a forward contract to buy
2,000,000 rubles on February 1, 20x2. What is the fair value of the forward contract on
December 31, 20x1?
A. $8,000
B. $7,800
C. $22,000
D. $8,200
On December 1, 20x1 Pimlico made sales to a customer in India and recorded Accounts
Receivable of 10,000,000 rupees. The customer has until March 1, 20x2 to pay. On December
1, 20x1, Pimlico paid $500 for a put option to sell rupees at a strike price of $2.30 per 100
rupees on March 1, 20x2, which was the spot rate on December 1, 20x1. On December 31,
20x1, the spot rate was $2.80 per 100 rupees and the option premium was $0.004 per 100
rupees.
7-9
31. What is the fair value of the option on December 1, 20x1?
A. $0
B. $500
C. $400
D. $10,000
A. $0
B. $500
C. $400
D. $10,000
33. 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
34. 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
7-10
35. When two parties from different countries enter into a transaction:
A. the currency to be used for settling the transaction is set by the government.
B. a third country's currency must be used to denominate the transaction.
C. the two parties are free to decide the currency that should be used to settle the
transaction.
D. the domestic currency of the buyer must be used to settle the transaction.
36. What has occurred when one company arranges to buy a foreign currency sometime in the
future, at an exchange rate quoted today?
A. The company has purchased a foreign currency option.

B. The company has entered a forward contract.
C. The currency has been devalued.
D. None of the above
37. What has occurred when one company purchases the right to buy a foreign currency
sometime in the future at an exchange rate quoted today?
A. The company has acquired a call option.

C. The currency has appreciated relative to the dollar.
D. The company has acquired a put option.
38. What is a "strike price?"
A. The exchange rate that is used to buy a foreign currency today

B. The price that will be paid for goods in a forward contract
C. The exchange rate that will be used if a foreign currency option is executed
D. The difference between the wholesale rate and the retail rate for foreign currency
exchange
7-11
39. What term is used for an option with a positive intrinsic value?
A. Put option
B. Over the counter
C. In the money
D. Call option
40. What is the intrinsic value of a foreign currency option?
A. The difference between the spot rate and the strike price
B. The gain that could be realized if the option was exercised immediately
C. The chance that a currency will rise over time to make the option in the money
D. The difference between a call option and a put option
41. On 1 January, 2015, Hikers Inc., a U.S.-based company, borrowed £200,000 on a two-year
note at a per annum interest of 4.5%. The spot rate on this day was $1.65 per pound. The
spot rate on 31 December, 2015, was $1.64 per pound. The journal entries to account for this
foreign currency borrowing will include:
A. a debit to Cash for $200,000 on January 1, 2015.

B. a credit to Notes Payable for $330,000 on December 31, 2015.
C. a debit to Foreign Exchange Loss for $90 on December 31, 2015.
D. a debit to Interest Expense for $14,760 on December 31, 2015.
42. What is the primary difference between a cash flow hedge and a fair value hedge?
A. The fair value hedge must completely offset the variability in the cash flow from the
foreign currency receivable or payable.
B. The cash flow hedge can only be used to offset potential foreign currency losses on
accounts receivable.
C. The cash flow hedge must completely offset the variability in cash flow from the foreign
currency receivable or payable.
D. The fair value hedge can only be used to offset the variability in cash flow from long-term
fixed assets related to foreign currency fluctuations.
7-12
43. Which of the following statements is true about hedge accounting under U.S. GAAP?
A. Companies may choose whether to account for derivatives as cash flow hedges or fair
value hedges.
B. If a derivative qualifies as a cash flow hedge, the hedging instrument is adjusted to fair
value on each balance sheet date.
C. If a derivative is elected by the company not to be designated as a cash flow hedge, it
must be accounted for as such.
D. Hedge accounting is only advantageous when a foreign currency depreciates between the
transaction date and the payment date.
44. Under U.S. GAAP, which of the following conditions must be met to qualify for hedge
accounting?
A. There must be formal documentation of the hedging relationship.

B. A derivative must be used specifically to hedge fair value exposure or cash flow exposure.
C. The hedge must be effective.
D. All of the above must be met in order to qualify for hedge accounting.
45. What is "hedge accounting?"
A. Any record keeping related to purchase, sale, or valuation of derivatives.

B. Recording options and other derivatives on the Balance Sheet.
C. Matching gains or losses from hedging with losses or gains from the risk being hedged.
D. Using multiple accounting methods to offset the effect of foreign currency exchange.
46. What kind of exposure exists for recognized foreign currency assets and liabilities?
A. Fair value exposure

B. Cash flow exposure
C. Both fair value exposure and cash flow exposure
D. Neither fair value exposure nor cash flow exposure
7-13
47. What kind of exposure exists for foreign currency firm commitments?

48. What is the requirement for reporting derivatives under international accounting standards
and U.S. GAAP?
A. They may be shown on the balance sheet or they may be treated as off-balance sheet
investments.
B. They must be shown on the balance sheet at fair value.
C. They must be shown on the balance sheet at historical cost.
D. They may be shown on the balance sheet at historical cost or at net realizable value.
49. What information is needed to determine the fair value of a foreign currency forward
contract?
A. The forward rate at the date the contract was entered

B. The current forward rate for a contract that matures on the same dates as the forward
contract that was entered into
C. A discount rate to determine the present value of the contract
D. All of the above information is needed
50. How is the fair value of a foreign currency option calculated?
A. By using the Box-Jenkins technique

B. Using the modified Black-Scholes pricing model
C. Through an arms-length transaction
D. Using quotes given daily in the Wall Street Journal
7-14
51. Under U.S. GAAP, where are changes in the fair value of derivatives reported?
A. As part of "Accumulated Other Comprehensive Income" on the Balance Sheet

B. They are not recognized until the options are exercised
C. Retained Earnings
52. Which of the following is done when accounting for a cash flow hedge, but is not done when
accounting for a fair value hedge?
A. The hedged asset or liability is adjusted to fair value.

B. Foreign exchange gains or losses on the hedged asset or liability are recorded in net
income.
C. Increases or decreases in a derivative's fair value are recorded in accumulated other
comprehensive income.
D. Gains or losses resulting from adjusting the fair value of a derivative are recorded in net
income.
53. How should discounts or premiums on forward contracts be treated if the derivative is
hedging a foreign-currency-denominated asset?
A. Carried on the balance sheet until the contract is completed

B. Included in income in the period the derivative is acquired
C. Amortized over the life of the forward contract
54. Under U.S. GAAP, what method of amortizing discounts or premiums on forward contracts
must be used?
A. Weighted average method or accelerated method

B. Sum of digit method only
C. Effective interest rate method or straight line method
D. Straight line method only
7-15
55. On May 1, 20x1, Ustar purchased a put option to sell £50,000 on April 30, 20x2 at a strike
price equal to $2, which was the spot rate on May 1, 20x1. Ustar paid a premium of $0.01 per
pound. How should the option be recorded on May 1, 20x1?
A. Debit Foreign Currency Option for $100,500.

B. Credit Foreign Currency Option for $100,500.
C. Debit Foreign Currency Option for $500.
D. Debit Hedge Expense for $500.
56. In hedge accounting, which of the following exposure should be hedged by foreign currency
derivative?
A. Temporal exposure
B. Fair value exposure
C. Derivative exposure
D. Forward contract exposure
57. When accounting for forward contracts, what is meant by the term "executory contract"?
A. No cash changes hands

B. The CEO of the company is the only one authorized to engage in the contract
C. There must be a price paid for the option
D. The contract is valid if one of the parties sign it
58. Excel Sources Inc. is a U.S. incorporated company. Due to change in exchange rate, it
receives $150,000 as payment against a sale of $165,000. Under the two-transaction
perspective:
A. no journal entry will be prepared on the date of sale.

B. the sale will be recorded at $150,000 on the date of sale.
C. foreign exchange loss will be recorded for $15,000.
D. Accounts Receivable will be debited for $15,000 on the date of payment.
7-16
59. Which of the following statements is true of the relationship between foreign currency
transactions, exchange rate changes, and foreign exchange gains and losses?
A. In an export sales, depreciation of the foreign currency causes a foreign exchange gain.
B. In an import purchase, appreciation of the foreign currency causes a foreign exchange
gain.
C. In an import purchase, depreciation of the foreign currency causes a foreign exchange
loss.
D. In an export sales, appreciation of the foreign currency causes a foreign exchange gain.
60. Which of the following statements is true of intrinsic value of options?
A. When the option strike price is more than the spot rate, the intrinsic value is zero.
B. When the option strike price is equal to the spot rate, the intrinsic value is positive.
C. When the option strike price is less than the spot rate, the intrinsic value is zero.
D. When the option strike price is more than the spot rate, the intrinsic value is negative.
7-17
Chapter 07 Foreign Currency Transactions and Hedging Foreign
Exchange Risk Answer Key
Multiple Choice Questions
1. According to the World Trade Organization, what was the size of international trade in
2011?
A. $7,000,000,000 (7 billion dollars)

B. $70,000,000,000 (70 billion dollars)
C. $37,000,000,000 (37 billion dollars)
D. $18,000,000,000,000 (18 trillion dollars)
Learning Objective: 07-01 Provide an overview of the foreign exchange market.

Level of Difficulty: 1 Easy
2. In the years between 1990 and 2001 when global gross domestic product rose 27%, what
was the growth in global exports?
A. 25%
B. 75%
C. 35%
D. 50%

Level of Difficulty: 2 Medium
7-18
3. What is a "foreign exchange rate?"
A. The price to buy a foreign currency

B. The price to buy foreign goods
C. The difference between the price of goods in a foreign currency and the price in a
domestic currency
D. The cost to hold all monetary assets in a single currency

4. Which of the following statements is true about the Euro?
A. It is the currency used by all countries in the European Union.

B. It is pegged to the U.S. dollar.
C. It is the currency required to be used in financial reporting under international
accounting standards.
D. None of the statements above is true.

5. A bank exchanging foreign currency makes its profit in what manner?
A. On the difference between the spot rate and the foreign rate
B. A bank is forbidden, by law, to charge a premium in foreign currency exchange
C. On the present value of the forward rate discounted to the date an option is purchased
D. On the difference between the buying and selling rates

7-19
6. King's Bank, a British company, purchases market research services from Harris
Interactive, a U.S. company. As per the terms of the contract, payment is to be made three
months later in U.S. dollars when the report is delivered. How would King's Bank like to
see the exchange rate move, assuming it isn't hedging the transaction?
A. It hopes that the U.S. dollar appreciates in value against the British pound.
B. It hopes that the British pound appreciates in value against the U.S. dollar.
C. It makes no difference, since they are the customer and the sale takes place in the
U.K.
D. It hopes that there is no change between the spot rate and the forward rate.

7. Why was there very little fluctuation in the foreign exchange rate in the period 1945-1973?
A. This was a period when the world economy was very stable.
B. There was very little growth in the world economy between 1945 and 1973.
C. Countries linked their currency to the U.S. dollar, which was backed by gold reserves.
D. Most currencies were pegged to the British pound, which could be converted to sterling
silver.
Learning Objective: 07-02 Explain how fluctuations in exchange rates give rise to foreign exchange risk.
8. The central bank of Country X buys and sells its own currency to ensure that the currency
is always exchanged in a ratio of 2:1 with the currency of Country Y. What can we
conclude about these two currencies?
A. Country X is using the Euro.

B. Country X has pegged its currency to the currency of Country Y.
C. Country X has an undesirable currency.
D. Country X allows its currency to float relative to the currency of Country Y.
7-20
9. When a currency is allowed to increase or decrease freely according to market forces, the
currency is said to:
A. be pegged to another currency.

B. be less valuable.
C. have independent float.
D. devalue.
10. For an upcoming trip, Pat wants to buy Euros at the local bank when the current exchange
rate quoted on OANDA.com was $1.563 per €1. What should Pat plan to pay for €1,000?
A. exactly $1,563
B. more than $1,563
C. about $640
D. less than $640
11. The number of Japanese yen (¥) required today to buy one U.S. dollar ($) today is called:
A. the spot rate.

B. the exact rate.
D. the retail rate.
7-21
12. The number of U.S. dollars ($) today to buy one U.K. pound (£) six months from now is
called:
A. the spot rate.

B. the exact rate.
D. the prime rate.
13. What is foreign exchange risk exposure?
A. The possibility of a loss because of changes in the value of a foreign currency

B. Losses caused by paying for purchased goods in a foreign currency
C. Losses caused by receiving payment in a foreign currency for goods sold
D. All of the above
Level of Difficulty: 3 Hard
14. What is "asset exposure" to foreign exchange risk?
A. The possibility that an asset denominated in domestic currency will decline in value
because of changes in the foreign exchange rate
B. The possibility that an asset denominated in a foreign currency will change in value
because of a change in the foreign exchange rate
C. The loss resulting from an import purchase when a foreign currency appreciates
D. The loss resulting from an import purchase when a foreign currency depreciates
7-22
15. What is a foreign currency transaction?
A. It is another name for an international transaction.

B. It is a transaction that involves payment at a date sometime in the future.
C. It is a business deal denominated in a currency other than a company's domestic
currency.
D. It is an economic event measured in a currency other than U.S. dollars.
Learning Objective: 07-03 Demonstrate the accounting for foreign currency transactions.
16. Under U.S. GAAP, what method is required to account for foreign currency transactions?

17. Under International Accounting Standards Board rules, what method is required to
account for foreign currency transactions?

7-23
18. Why must the two-transaction perspective be used for recording foreign currency
transactions under U.S. GAAP?
A. The two-transaction perspective is required under IFRS.

B. U.S. GAAP requires conservatism in financial reporting.
C. All other methods are excessively complicated to use and therefore obscure the
essence of the transaction.
D. Management made two decisions: one to sell and another to extend credit in a foreign
currency.
19. Under U.S. GAAP, foreign exchange losses should be recorded by:
A. debiting "Foreign Exchange Loss".

B. crediting "Foreign Exchange Loss".
C. debiting "Retained Earnings".
D. debiting "Sales Revenue".
20. Under U.S. GAAP, what is the proper treatment of unrealized foreign exchange losses?
A. They should be deferred on the Balance Sheet until the cash is paid.
B. They should not be recognized until cash is received to complete the transaction.
C. They should be recorded on the Income Statement in the period the exchange rate
changes.
D. They should be deferred on the Balance Sheet until an offsetting foreign exchange gain
is realized.
7-24
21. Under U.S. GAAP, what is the proper treatment of unrealized foreign exchange gains?
A. They should be deferred on the Balance Sheet until cash is received.

B. The principle of conservatism requires that they should never be recognized.
C. They should not be recorded until cash is received and the exchange transaction is
completed.
D. They should be recognized in income on the date the exchange rate changes.
22. Why is the accrual method of accounting for unrealized foreign exchange gains sometimes
criticized?
A. Foreign exchange gains almost never occur, so there is no reason to have an

accounting standard for it.
B. It violates the principle of conservatism.
C. It is not objective.
D. There is no reliable method for measuring unrealized foreign exchange gains.
23. How should U.S. companies record receivables and payables from international trade that
are denominated in foreign currencies?
A. All assets and liabilities of U.S. companies must be recorded in U.S. dollars.
B. Conservatism would dictate that liabilities should be recorded in the currency in which
they are payable, but assets should be recorded in U.S. dollars, regardless of what
currency will be received.
C. There should be separate receivable and payable accounts for each currency that is
used by the company.
D. The company should choose any one currency to use for recording receivable and
payables so that there is consistency in the accounts.
7-25
24. Northland Corporation recorded £1,000,000 in Accounts Receivable for sales to customers
in the United Kingdom and recorded Accounts Payable of 2,000,000 Yuan for product
purchased from China. If Northland recorded a foreign currency exchange loss on its
receivables and a foreign currency gain on its payables, what must have happened to each
currency?
A. Yuan appreciated, Pound depreciated

B. Yuan depreciated, Pound appreciated
C. Yuan appreciated, Pound appreciated
D. Yuan depreciated, Pound depreciated
25. A noncancelable sales order that specifies foreign currency price and date of delivery is
known as a:
A. hedge.
B. foreign currency firm commitment.
C. forward contract.
D. put option.
Amazing Corporation, a U.S. enterprise, sold product to a customer in Wales on October 1,

20x1 for £100,000 with payment required on April 1, 20x2. Relevant exchange rates are:
The discount factor corresponding to the company's incremental borrowing rate for 6
months is 0.95.
7-26
26. Assuming that Amazing Corporation does not hedge this transaction, what is the amount
of exchange gain or loss that it should show on its December 31, 20x1 income statement?
A. Loss $1,000
B. Loss $2,000
C. Gain $1,000
D. Gain $1,900
27. Assume that Amazing Corporation enters a forward contract on October 1, 20x1 to sell
£100,000 six months hence, on April 1, 20x2. How should Amazing Corporation report the
forward contract on its December 31, 20x1 financial statements?
A. Asset $1,950
B. Liability $1,950
C. Asset $1,000
D. Asset $950
28. What term is used to describe the circumstances under which Amazing Corporation is
entering the forward contract?
A. Hedge of an unrecognized foreign currency firm commitment

B. Hedge of a recognized foreign-currency-denominated asset
C. Hedge of a forecast foreign-currency-denominated transaction
D. Hedge of net investment in foreign operations
7-27
On November 1, 20x1 Zamfir Company, a U.S. corporation, purchased minerals from a
Russian company for 2,000,000 rubles, payable in 3 months. The relevant exchange rates
between the U.S. and Russian currencies are given:
The company's incremental borrowing rate provides a discount rate of 0.975 for three
months.
29. If Zamfir does not attempt to hedge this transaction, what is the gain or loss that should
be shown on the company's December 31, 20x1 financial statements?
A. $22,000 loss
B. $21,450 loss
C. $8,000 gain
D. $7,800 gain
30. Assume that on November 1, 20x1 Zamfir Company enters a forward contract to buy
2,000,000 rubles on February 1, 20x2. What is the fair value of the forward contract on
December 31, 20x1?
A. $8,000
B. $7,800
C. $22,000
D. $8,200
7-28
On December 1, 20x1 Pimlico made sales to a customer in India and recorded Accounts
Receivable of 10,000,000 rupees. The customer has until March 1, 20x2 to pay. On
December 1, 20x1, Pimlico paid $500 for a put option to sell rupees at a strike price of
$2.30 per 100 rupees on March 1, 20x2, which was the spot rate on December 1, 20x1. On
December 31, 20x1, the spot rate was $2.80 per 100 rupees and the option premium was
$0.004 per 100 rupees.
A. $0
B. $500
C. $400
D. $10,000
A. $0
B. $500
C. $400
D. $10,000
33. 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
7-29
34. 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
35. When two parties from different countries enter into a transaction:
A. the currency to be used for settling the transaction is set by the government.
B. a third country's currency must be used to denominate the transaction.
C. the two parties are free to decide the currency that should be used to settle the
transaction.
D. the domestic currency of the buyer must be used to settle the transaction.
Learning Objective: 07-04 Describe how foreign currency forward contracts and foreign currency options can be used to
hedge foreign exchange risk.
36. What has occurred when one company arranges to buy a foreign currency sometime in the
future, at an exchange rate quoted today?
A. The company has purchased a foreign currency option.

C. The currency has been devalued.
7-30
37. What has occurred when one company purchases the right to buy a foreign currency
sometime in the future at an exchange rate quoted today?
A. The company has acquired a call option.

C. The currency has appreciated relative to the dollar.
D. The company has acquired a put option.
38. What is a "strike price?"
A. The exchange rate that is used to buy a foreign currency today

B. The price that will be paid for goods in a forward contract
C. The exchange rate that will be used if a foreign currency option is executed
D. The difference between the wholesale rate and the retail rate for foreign currency
exchange
39. What term is used for an option with a positive intrinsic value?
A. Put option
B. Over the counter
C. In the money
D. Call option
7-31
40. What is the intrinsic value of a foreign currency option?
A. The difference between the spot rate and the strike price
B. The gain that could be realized if the option was exercised immediately
C. The chance that a currency will rise over time to make the option in the money
D. The difference between a call option and a put option
41. On 1 January, 2015, Hikers Inc., a U.S.-based company, borrowed £200,000 on a two-year
note at a per annum interest of 4.5%. The spot rate on this day was $1.65 per pound. The
spot rate on 31 December, 2015, was $1.64 per pound. The journal entries to account for
this foreign currency borrowing will include:
A. a debit to Cash for $200,000 on January 1, 2015.

B. a credit to Notes Payable for $330,000 on December 31, 2015.
C. a debit to Foreign Exchange Loss for $90 on December 31, 2015.
D. a debit to Interest Expense for $14,760 on December 31, 2015.
42. What is the primary difference between a cash flow hedge and a fair value hedge?
A. The fair value hedge must completely offset the variability in the cash flow from the
B. The cash flow hedge can only be used to offset potential foreign currency losses on
accounts receivable.
C. The cash flow hedge must completely offset the variability in cash flow from the
D. The fair value hedge can only be used to offset the variability in cash flow from long-
term fixed assets related to foreign currency fluctuations.
Learning Objective: 07-05 Describe the concepts of cash flow hedges; fair value hedges; and hedge accounting.
7-32
43. Which of the following statements is true about hedge accounting under U.S. GAAP?
A. Companies may choose whether to account for derivatives as cash flow hedges or fair
value hedges.
B. If a derivative qualifies as a cash flow hedge, the hedging instrument is adjusted to fair
value on each balance sheet date.
C. If a derivative is elected by the company not to be designated as a cash flow hedge, it
must be accounted for as such.
D. Hedge accounting is only advantageous when a foreign currency depreciates between
the transaction date and the payment date.
44. Under U.S. GAAP, which of the following conditions must be met to qualify for hedge
accounting?
A. There must be formal documentation of the hedging relationship.

B. A derivative must be used specifically to hedge fair value exposure or cash flow
exposure.
C. The hedge must be effective.
D. All of the above must be met in order to qualify for hedge accounting.
45. What is "hedge accounting?"
A. Any record keeping related to purchase, sale, or valuation of derivatives.

B. Recording options and other derivatives on the Balance Sheet.
C. Matching gains or losses from hedging with losses or gains from the risk being hedged.
D. Using multiple accounting methods to offset the effect of foreign currency exchange.
7-33
46. What kind of exposure exists for recognized foreign currency assets and liabilities?

47. What kind of exposure exists for foreign currency firm commitments?

48. What is the requirement for reporting derivatives under international accounting standards
and U.S. GAAP?
A. They may be shown on the balance sheet or they may be treated as off-balance sheet
investments.
B. They must be shown on the balance sheet at fair value.
C. They must be shown on the balance sheet at historical cost.
D. They may be shown on the balance sheet at historical cost or at net realizable value.
Learning Objective: 07-06 Demonstrate the accounting for forward contracts and options used as cash flow hedges and
fair value hedges to hedge foreign currency assets and liabilities; foreign currency firm commitments; and forecasted
foreign currency transactions.
7-34
49. What information is needed to determine the fair value of a foreign currency forward
contract?
A. The forward rate at the date the contract was entered

B. The current forward rate for a contract that matures on the same dates as the forward
contract that was entered into
C. A discount rate to determine the present value of the contract
D. All of the above information is needed
50. How is the fair value of a foreign currency option calculated?
A. By using the Box-Jenkins technique

B. Using the modified Black-Scholes pricing model
C. Through an arms-length transaction
D. Using quotes given daily in the Wall Street Journal
51. Under U.S. GAAP, where are changes in the fair value of derivatives reported?
A. As part of "Accumulated Other Comprehensive Income" on the Balance Sheet

B. They are not recognized until the options are exercised
C. Retained Earnings
7-35
52. Which of the following is done when accounting for a cash flow hedge, but is not done
when accounting for a fair value hedge?
A. The hedged asset or liability is adjusted to fair value.

B. Foreign exchange gains or losses on the hedged asset or liability are recorded in net
income.
C. Increases or decreases in a derivative's fair value are recorded in accumulated other
comprehensive income.
D. Gains or losses resulting from adjusting the fair value of a derivative are recorded in
net income.
53. How should discounts or premiums on forward contracts be treated if the derivative is
hedging a foreign-currency-denominated asset?
A. Carried on the balance sheet until the contract is completed

B. Included in income in the period the derivative is acquired
C. Amortized over the life of the forward contract
7-36
54. Under U.S. GAAP, what method of amortizing discounts or premiums on forward contracts
must be used?
A. Weighted average method or accelerated method

B. Sum of digit method only
C. Effective interest rate method or straight line method
D. Straight line method only
55. On May 1, 20x1, Ustar purchased a put option to sell £50,000 on April 30, 20x2 at a strike
price equal to $2, which was the spot rate on May 1, 20x1. Ustar paid a premium of $0.01
per pound. How should the option be recorded on May 1, 20x1?
A. Debit Foreign Currency Option for $100,500.

B. Credit Foreign Currency Option for $100,500.
C. Debit Foreign Currency Option for $500.
D. Debit Hedge Expense for $500.
56. In hedge accounting, which of the following exposure should be hedged by foreign
currency derivative?
A. Temporal exposure
B. Fair value exposure
C. Derivative exposure
D. Forward contract exposure
7-37
57. When accounting for forward contracts, what is meant by the term "executory contract"?
A. No cash changes hands

B. The CEO of the company is the only one authorized to engage in the contract
C. There must be a price paid for the option
D. The contract is valid if one of the parties sign it
58. Excel Sources Inc. is a U.S. incorporated company. Due to change in exchange rate, it
receives $150,000 as payment against a sale of $165,000. Under the two-transaction
perspective:
A. no journal entry will be prepared on the date of sale.

B. the sale will be recorded at $150,000 on the date of sale.
C. foreign exchange loss will be recorded for $15,000.
D. Accounts Receivable will be debited for $15,000 on the date of payment.

59. Which of the following statements is true of the relationship between foreign currency
transactions, exchange rate changes, and foreign exchange gains and losses?
A. In an export sales, depreciation of the foreign currency causes a foreign exchange gain.
B. In an import purchase, appreciation of the foreign currency causes a foreign exchange
gain.
C. In an import purchase, depreciation of the foreign currency causes a foreign exchange
loss.
D. In an export sales, appreciation of the foreign currency causes a foreign exchange gain.
7-38
60. Which of the following statements is true of intrinsic value of options?
A. When the option strike price is more than the spot rate, the intrinsic value is zero.
B. When the option strike price is equal to the spot rate, the intrinsic value is positive.
C. When the option strike price is less than the spot rate, the intrinsic value is zero.
D. When the option strike price is more than the spot rate, the intrinsic value is negative.
7-39
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Come la rondin garrula,
Allor canterò anch’io,
Onde la Musa arridami
E l’Eliconio Dio;
Però che già Amiclea [156]
Sè col tacer perdea.
CORO
Chi non provò mai palpito

Finor d’affetto in core,
Doman lo dee dischiudere
Al più fervente amore.
151. Tradussi Dione, come nel testo: forse più giustamente dovea dire
Dionea, da Dione che Omero dà per madre a Venere. Esiodo la dice
figlia dell’Oceano e di Teti, e fa nascere Venere dalle spume del mare.
152. Delia, soprannome di Diana, dall’isola di Delo, ove era nata. Vedi
Virgilio, Eglog. 3, v. 67.
153. Ibla, monte della Sicilia, celebre per lo squisito miele che vi si
raccoglieva. Due città sicule portavano questo nome, Hybla major e
Hybla parva, sulla costa orientale, le cui rovine veggonsi tuttavia in riva
al mare. I colli che la circondano, lungo il fiume Alabus, sono in tutte le
stagioni coperti di fiori, di piante odorifere, di timo e di sermolino, d’onde
le api traggono anche presentemente il più squisito miele. Già induce a
credere che il miele d’Ibla, tanto vantato dagli antichi, fosse raccolto
presso d’Ibla la piccola.
154. Enna, città in luogo eminente in mezzo della Sicilia. Le praterie dei
dintorni, inframmezzate da limpidi ruscelli, indorse di sempre
verdeggianti boschi e di fiori odorosi, erano considerate come il
soggiorno prediletto di Cerere. Fu in quella bellissima campagna che
venne rapita la di lei figlia Libera, più nota sotto il nome di Proserpina.
155. Tereo, dice la Mitologia, fu re di Tracia, figliuolo di Marte e della ninfa

Bistonide. Ebbe per moglie Progne, figlia di Pandione re di Atene, la
quale dopo alcun tempo, mostrò desiderio di rivedere la propria sorella
Filomela. Tereo per compiacerla si recò in Atene, ed ottenne da
Pandione che lasciasse partire secolui Filomela; ma invaghitosene
cammin facendo, la violò in una casa pastoreccia, ed affinchè non
palesasse il suo delitto, le tagliò la lingua facendo credere alla moglie
che la sorella era morta in mare. Filomela giunse però a poter disegnare
sopra una tela la sua disgrazia, e la fe’ poscia per mezzo d’una fantesca
a Progne pervenire. Questa trasse astutamente la sorella dal luogo
ov’era rinchiusa e seco la condusse nella reggia; indi per vendicarsi,
prese il bambino Iti, partorito da Filomela, e dopo di averlo ridotto in
pezzi, li diè a mangiare al padre. Tereo di ciò avvedutosi, prese ad
inseguire con isguainato brando le due sorelle, le quali furono dagli Dei
per compassione trasformate Progne in rondine, Filomela in usignuolo,
Iti in fagiano e Tereo in upupa. — Vedi Ovid. Met., lib. 6. Mitologia di tutti
i Popoli. vol 6.
156. Amiclea od Amicla, città antica italiana, che dissero fabbricata dai
compagni di Castore e Polluce, i cui abitanti astenevansi da ogni
nutrimento animale. Furono distrutti dai serpenti, de’ quali abbondava il
suo paese. Erano grandi osservatori del silenzio, onde taciti li chiamò
Virgilio: Tacitis regnavit Amiclis (Æneid. lib. 10, v. 565) e qui pure nel
Pervigilium vien designata Amicla d’essersi perduta col silenzio: forse
non avendo invocato soccorso a tempo quando era devastata dai
serpenti.
157.
A placarla con suppliche voi chiama

Tutte il dover: dipendon dal suo nome
E onestade e bellezza e buona fama.
Tr. G. B. Bianchi.
158. Vedi nel Vol. I. il Cap. VIII. — I Templi, dove si parla di quello di Iside.
159. «De’ ladri e degli augei vigil custode.»
160. N. 176 del Catalogo del Museo Nazionale di Napoli, Raccolta

Pornografica. — Napoli, 1866. Stabilim. Tip. in S. Teresa.
161. Arditi, Il Fascino, pag. 45, nt. 2.
162. Vol. II. Cap. XII, p. 106-113. Milano, 1873. Presso Felice Legros, editore.
163.
Omai palesi della Buona Dea

Fansi gli arcani, allor che il flauto i lombi
Comincia a stuzzicar: del corno al suono,
Del vino all’estro, di Priapo attonite
Le Menadi, rotondo il crin, volteggiano.
Oh quanta allora in que’ cervelli accendasi
Libidinosa rabbia! Oh con qual impeto
Guizzano, scoppian, s’agitan, vociferano!
Del vecchio vin che bevvero, qual circola
Acre vapor nel trasudante femore.
Sat. VI, v. 314-319.
164. V. 346-49:
Ed or qual ara del suo Clodio è priva?

Vecchi amici, a l’orecchio il nostro avviso,
Già datomi una volta, ancor mi sona:
Chiudila, custodiscila. — Benissimo,
Ma de’ custodi chi sarà il custode?
165.
. . . . a poco a poco
Te aggregheranno del bel numer uno
Quei che accerchian la fronte in lunghe bende,
E tutto avvolgon di monili ’l collo.
Ne’ penetrali lor, con ampie tazze
E ventraia di tenera porcella
Placan la Bona Dea. Ma quelle soglie,
Con rito inverso, or non avvien che tocchi
Piè femminile: a’ soli maschi l’ara
Apresi de la Dea. Lungi, o profane!
Alto s’intona; no, che qui non geme
Tibia ispirata da femmineo labbro.
Tal’orgie i Batti usar fra tede arcane
Solean, stancando l’Attica Cotitto.
Id., Ibid. Trad. di Gargallo.
166.
. . . Via, fuori
. . . . qual vergogna! S’alzi
Da l’equestre cuscin, chi non possiede
L’equestre censo; e de’ mezzan d’amore
Vi sottentrino i figli, in qual sia chiasso
Nati pur sien. Costinci applauda il figlio
Del grasso banditor tra la ben nata
Da’ rezïari giovinaglia, e quella
Degli accoltellatori.
V. 153-158. — Tr. Gargallo.
167.
È vecchia usanza, o Postumo, ed antica

Far cigolar gli altrui letti, e il santo
Genio schermir che a talami presiede.
V. 21-22.
168.
Lascio i parti supposti, i gaudi, i voti

Spesso appagati dal Velabro. Oh quante
Volte raccolti son dalle sue fogne
Gli ignoti bimbi, sul cui falso corpo
Nome di Scauri apponsi, e poi ne ottiene
Suoi pontefici Giove, i salî Marte.
Capricciosa fortuna ivi la notte
A que’ nudi bambin volteggia intorno,
E con l’alito suo tutti gli scalda,
E in grembo se li avvolge. Allor tra gli alti
Palagi li dispensa, e ne prepara
Segreta farsa a sè: l’amor son questi,
Questi son la sua cura; e che sien detti
Figli delle Fortuna ella gioisce.
Sat. VI, vv. 602-609.
169. «Nei quadrivii e ne’ chiassi.» Carmen LVIII, Ad Cœlium.
170.
Amo ed odio insiem, se chieda

A me alcun come succeda?
Io l’ignoro, eppure il sento
E ne provo un gran tormento.
Carmen LXXXV. — Mia trad.
171.
Iam ne exciderunt vigilatis furta Suburræ

Et mea nocturnis trita fenestra dolis?
Per quam demisso quoties tibi fune pependi,
Alterna veniens in tua colla manu.
E già i bei furti di Suburra e il caro
Trescar notturno, e il mio
Balcon per te socchiuso, agli altri avaro,
Ti caddero in obblio?
Il mio balcon, d’onde alla fune appesa
Spesso vêr te calai,
E con alterna delle mani offesa
Al collo tuo sbalzai?
Trad. Vismara.
172.
Pria della mensa è poca cosa assai,

Ma il vin le dona mille grazie e mille.
173.
Bianca e fredda a veder, ma tra i bicchieri

Un di goderne, un di sfidarne ha petto.
Trad. Vismara.
174.
Non più vezzoso ad occhieggiar qual fai,

O fra i spettacol’ del lascivo Foro,
O sul passaggio di Pompeo n’andrai.
E d’ora innanzi non ti dar la pena
Di torcer suso il collo agli alti scanni [175]
Ne l’affollata teatrale arena.
Nè per la via farai fermar lettica
O aprir portiera onde ficcarvi il capo
E parlottar colla passante amica.
Ma pria di tutto fuor di casa, fuori
Ligdamo, fonte d’ogni mal; si venda,
E con i ferri ai pie’ serva e lavori.
175. Dissi già nel capitolo de’ Teatri come le cortigiane fossero nel
quattordicesimo gradino del teatro, citando all’uopo il Satyricon di
Apulejo.
176. Amorum, Lib. III. Eleg. XV:
Madre di amori teneri,

Cerca novel poeta.
Trad. di Francesco Cavriani.
177.
Che vidi incauto? perchè i fati vollero

Che arcana colpa il guardo mio scorgesse?
Vide a caso Atteone ignuda Cinzia;
Pur de’ suoi cani pasto egli è rimaso.
Trad. di Paolo Mistrorigo.
178. Sopra la Vita di Publio Ovidio Nasone, Discorsi. Discorso I.
179.
Punito io son, chè un turpe fatto videro

Gli incauti occhi; son reo che gli occhi ebb’io.
Trad. di Paolo Mistrorigo.
180.
Versi ed error, due colpe mi perdettero.

Id., Ibid.
181. Fu Sotade poeta di Tracia, che scrisse in verso ogni sorta di libidini, e
sembra che scrivesse in quel genere che i Francesi chiamano poesie
fuggitive e che in latino diconsi commatæ, cioè incise, spartite. Così le
chiama Quintiliano; e pare che a’ tempi di lui fossero conosciute,
perciocchè egli proibisse agli istitutori di parlarne a’ giovinetti.
Intitolavansi quelle poesie del poeta Sotade Cinaedos, per cui Marziale
lo chiama Cinedo, ed altri chiama Jonico quel poema, giacchè l’epiteto
di jonico davasi a tutto ciò ch’era molle e lascivo. Visse questo poeta a’
tempi di Tolomeo, che il fece gittare in mare entro una cassa di piombo.
182. Molti de’ carmi di Catullo tengo da me volgarizzati inediti; epperò mi

valgo sempre per questo poeta della mia traduzione non edita per anco.
Donna non fu che tanto

Amata fosse, come or tu da me;
Nè mai servata, quanto
Da me lo fosse, la giurata fè.
Lesbia, or tu m’hai condotto,
Fossi pur buona, a più non ti stimar:
Nè, s’anco più corrotto
Tu avessi il cor, ti lascerò d’amar.
183.
Abbastanza io fui la favola

De le mense scioperate,
E di me ciascun fe’ ridere
A sua posta le brigate.
Tr. Vismara.
184. Sat. 2, lib. I:
Facil Venere e pronta amo e colei

Che ti dice: fra breve; e fia maggiore
La voluttà, se partirà il marito.
Mi son sostituito nella traduzione al Gargallo, che questa volta non ho

proprio capito che dir si volesse.
185. Sat. I. Lib. 11.
. . . . . Canidia, figlia
D’Albuzio, a’ suoi nemici erbe e veleno.
Tr. Gargallo.
186. «Irritabil genia quella dei vati.» Oraz.
187.
Il diritto dei tre figli mi diede,

De’ miei studi poetici in mercede,
Chi potea darlo: addio consorte: vano
Il don sortir non dee del mio sovrano.
Trad. Magenta.
188.
LA PROSTITUZIONE DELLE MUSE [189]
Or la misera fame, ed i sottili

Distillati veleni entro le dapi,
Tutto un popolo esangue e amici pingui
Per ricchi funerali, ed un impero,
Che sotto il nome della pace infinto,
Mollemente si solve e si consuma,
Quanto fa dir la nostra età la bella
Età dell’oro, canteran le Muse.
E canteranno i lagrimosi incendi
Della marmorea Roma [190], agli occhi loro
Vaghi sollazzi della negra notte,
Egregie gesta di colui che baldo
Dell’assassinio della madre esulta,
Che alle Furie materne altre ne oppone,
Alle serpi altre serpi, ognor la mano
Pronta a nuovi pugnali e di peggiori
Stragi a far tutto esterrefatto il mondo.
Canteranno esse scellerati carmi,
Oscene voluttà, sozzi imenei
D’un favorito della sposa infami [191],
Di Venere nefandi monumenti;
Nè l’onta proveran de’ loro canti
Le svergognate Muse, e di lor nome
Verginal, di lor fama immacolata
Fatte immemori adesso. Ah! via gittato
Ogni pudor, sotto color bugiardo
Di lor saver, prostitüir sè stesse,
E le figliuole dell’olimpio Giove
Sovra gli umani eccelse, ancor che nulla
Sentan necessità, fanno a vil prezzo
Di lor sacra persona empio mercato.
Esse al capriccio dei superbo Mena [192]
Piegan codarde, ovver di Policleto
Obbedïenti al cenno, anco beate
D’esigua lode, appassionate, ardenti
Delle recenti impronte, onde una fronte
Va maculata, o delle ree vestigia
Che lasciò la catena od il flagello
A un Geta [193], che da jer fatto è liberto.
Immemori, che più? del divo padre
E de’ numi cognati e dell’antico
Onor di casta e verginal pietate.
Oh dolor! Alle Furie e a mostri orrendi
Hanno eretto l’altare e i cenni impuri
Dell’ignobile Tizio [194] osano voci
Del Destino appellar: quanto ha l’Olimpo
Consacrarono all’Erebo; già templi
Osaron scellerati ergere ed are
Sacrileghe, e per quanto è di lor possa,
I cacciati dal cielo empi Titani
Tentan ripor nelle superne sedi
E stolto crede a’ loro accenti il mondo.
189. Con una sacra indegnazione e con maggior calore per avventura di
Persio, Turno, vissuto sotto il regno di Nerone e vecchio sotto quello
degli imperatori di casa Flavia, compose satire che quello imperante
stigmatizzarono a fuoco. Vuolsi che le sue composizioni non publicasse
finchè visse quel tiranno; ma se ciò fosse, sarebbe stato minore il suo
coraggio, nè di lui avrebbe Marziale potuto dettare il seguente
epigramma:
Contulit ad satyras ingentia pectora Turnus:

Cur non ad Memoris carmina? Frater erat.
Turno piegò l’ingegno suo sovrano

Al satirico stil: perchè di Memore
Non i versi emular?... Gli era germano.
Epigr. lib. XI, 11. — Tr. Magenta.
Da tal epigramma apprendiamo adunque che Turno fosse fratello di un

Memore, poeta tragico, come nel precedente epigramma lo stesso
Marziale lasciò ricordato:
Clarus fronde Jovis, Romani fama cothurni.
Del romano coturno illustro e cinto

Della fronda di Giove.
Id. ib. 10.
L’unico frammento rimasto delle Satire di Turno è, come dissi, codesto

che traduco: taluni vollero perfino attribuirlo a Lucano, ma i più lo
assegnano a Turno.
190. È chiara in questo verso l’allusione all’incendio di Roma avvenuto sotto il

regno di Nerone, il quale ne fu ritenuto autore.
191. Son note le pazze e infami nozze di Nerone con Sporo, celebrate
publicamente in Roma. Questo verso ricorda quello della Sat. II di
Giovenale:
Dives erit, magno quæ dormit tertia lecto.
. . . . Sposa che in ampio letto

Terza a dormire adattisi, fia ricca.
V. 60. Trad. Gargallo.
192. Mena fu liberto e favorito del giovane Pompeo; fu vanitoso sino al
ridicolo, e di sua perfidia andò famigerato nella guerra di Augusto e di
Sesto Pompeo. Orazio lo berteggia in una satira. Morì nella guerra che
Ottavio sostenne contro gli Illirii.
193. Geta è altro favorito, che eccitò sotto Nerone una sedizione a Roma. Di
lui parla Tacito nel lib. II, cap. 72 delle Storie.
194. Tizio, cavalier romano, preposto a guardia di Messalina. Di lui pure

fanno menzione gli Annali di Tacito lib. II, cap. 35.
195. Lib. VII, ep. 21.
196. Lib. VII, ep. 24.
197. Lib. XII, 18.
198. Études de moeurs et de critique sur les Poètes latins de la décadence.

M. D. Nisard. Bruxelles 1834.
199.
..... Ascondere
Con segni intelligenti
I lusinghieri accenti.
200. Cic. Pro Cælio. «Libidini, amori, adulterii, banchetti e commessazioni.»
201.
I Bagni, i vini e Venere

Riducon l’uomo in cenere,
A’ mortali gradita
Fan nondimen la vita.
202.
Vuoi tu forse ch’io segga in fra codeste

Prosede e avanzi d’Alicarie, amiche
A’ panattier’, sciupate e infette serve?
Pœnulus. Act. I, sc. 2, v. 53-55.
Noti il lettore come Plauto usi della parola scœno, invece di cœno, come
dai Sabini si usava allora sostituire nella pronunzia la s al c. Così
scœlum per cœlum, scœna per cœna. La medesima cosa si fa oggidì,
in alcune parti d’Italia e massime in Toscana.
203.
La Blitea è una sporca meretrice

La qual non pute che di vino.
204. Il comico latino che di queste femmine se ne intendeva, nella già citata
commedia del Pœnulus non dimenticò la scorta diobolaria, che
retribuivasi di due oboli, che è la stessa moneta del dupondium, e a
siffatte sciagurate accenna pur Seneca nel Lib. VI Controversiarum, in
quel passo: Itane decem juvenes perierunt propter dupondios duos?
205.
ARGIRIPPO
Non sono morto affatto, ancor mi resta
Qualche poco di vita, e quel che chiedi
Ancor darti poss’io; ma darò solo
Che tu rimanga in mio possesso e sappia
Che un anno intero tu mi serva e intanto
Presso di te nessun altro tu ammetta.
CLEERETA
E se tu il vuoi, quanti ho in mia casa schiavi
Evirerò; ma se d’avermi brami,
Il singrafo mi reca, e come chiedi
E come piace a te, dettane i patti:
Ma insiem portami il prezzo, agevolmente
Il resto accetterò. Son dei lenoni
Pari alle porte de’ gabellieri,
S’apron se paghi, se no, restan chiuse.
206.
DIABOLO
Fra me, l’amica mia e la mezzana
Leggine i patti, perocchè poeta
In codesti negozi unico sei.
Suvvia, mostrami il singrafo che hai scritto.
207. Pag. 70. Milano, Edoardo Sonzogno editore, 1872.

Non so trattenermi dal riferire un tale contratto, simile in tutto a’ singrafi
di fedeltà di cui sopra è parola.
Gostanzo, il Procuratore, il secondo Notaio.

Pro. Presto, Alessandro, quei patti obbligatorî: state ad
ascoltare.
Gos. Ascolto.
Ales. In Christi nomine amen. Millesimo quingentesimo
quinquagesimo primo.
Pro. Etc. vieni al merito: lascia stare le clausole generali.
Ales. M. Gostanzo figliuolo di M. Massimo Caraccioli, parte
una, e Madonna Andriana da Spoleti parte altera omnibus
modis etc. etiam con consentimento di Madonna Dorotea sua
figliuola, tutti presenti, e che accettano volontieri etc. son
divenuti agl’infrascritti patti, videlicet che la detta donna
Andriana lascerà Madonna Dorotea sua figliuola al detto M.
Gostanzo un anno intero da star seco dì e notte.
Gos. A lui solo e non ad altri.
Pro. Gliel’aggiungo io. Presto, Alessandro.
Gos. Sì in ogni modo: vedete di grazia d’imbrigliami sì bene
quest’asina, non le voglia il trarmi de’ calci.
Pro. Udite pur, seguita.
Ales. E che nel detto tempo non metta in casa nessun amico,
parente, o innamorato suo antico, moderno, imaginario,
quovis modo.
Gos. Se non me solo.
Pro. Intendo; che non dicesse poi che sete escluso ancor voi;
passa oltre.
Ales. Non ricevi nè mandi lettera, non abbi in casa carta e
inchiostro per scrivere; non tenghi ritratto degli innamorati
vecchi, e passato il terzo giorno gli sia lecito impune et de
facto abbruciarli; non vada a festa, a banchetti, nè a chiesa;
non inviti nessuno a mangiare, non stia in porta, non facci
trebbe, non guardi giù dalle finestre, non oda cantilene o
sospir di gente che passi per la strada, e sia lecito al detto M.
Gostanzo di chiuder le porte e tenerle chiuse quanto gli piace
senza alcuna replica.
Gos. Oh mi piace; oh come va bene!
Pro. Aspettate pur, seguita.
Ales. Levi tutte l’occasioni di farlo sospettare; non calchi il
piede a nissuno, non tocchi la mano, non pizzichi, non si levi,
non si muova.
Gos. Piano, anzi voglio ch’ella si muova e scherzi meco in
camera.
Pro. Con altri, con altri, s’intende.
Gos. Passate oltre.
Ales. Non alzi un occhio, non starnuti, non fiati senza suo
consentimento, non rida dietro alla finestra a nessuno, non si
lasci baciar la mano, o veder gli anelli, non facci cenno, non
motteggi, non guardi, non mostri di tossir e quando è
sforzata, non faccia vezzi nè favore a nessuno; di più non si
finga ammalata per farsi ungere, stropicciare e sia lecito al
detto M. Gostanzo durante il detto termine per qualsivoglia
minima occasione di gelosia ch’ella gli dia, chiuder la detta
Dorotea in camera, in cucina, in sala, di sotto, di sopra e in
qual parte più gli piacerà della casa, quomodocunque et
qualitercunque et ella accetti ogni cosa per bene.
Gos. Benissimo; ma voi mi lasciate il meglio e più importante.
Pro. Che cosa?
Gos. Preti, Frati, Scapuccini, Guastallini, Pinzocheri, Chietini,
Giovanelli, Riformati, Gabbadei, Zoccolanti, Collitorti nè per
confessione, nè per visita, nè per altro non mettano il piede in
casa sotto alcun pretesto.
Pro. Buon ricordo per mia fè. Presto, Alessandro.
Gos. Aggiungeteglielo in ogni modo, perchè non sono al
mondo lenoni più veementi di queste canaglie.
Pro. Mi meraviglio che la somma Orlandina non ne faccia
menzione, donde ho cavato questo estratto. Hai spedito,
Alessandro? seguita.
Ales. E che nel sopradetto termine la detta Andriana non abbi
alcuna autorità in casa, ma si stia cheta e goda e taccia et
attenda solamente a covar il fuoco, cuocer castagne, ber vin
dolce, sputar nella cenere, e se pur vuol gridar gridi alla
gatta, solleciti il desinare e si faccia legger dal ragazzo
qualche leggenda; del resto lasci il dominio della casa in
podestà del detto M. Gostanzo, sotto la pena di non ber vino,
e di esser staffilata all’arbitrio del detto M. Gostanzo.
Gos. O buono! seguita.
Ales. Dall’altra banda sia obligato il detto M. Gostanzo
numerargli subito, senza alcuna dilazione, sessanta scudi
d’oro, de’ quali possono disporre a lor modo, senz’alcun
obbligo di restituirli.
Gos. Andiam dentro.
208.
Il pastor Coridon d’Alessi ardea,

D’Alessi bel fanciul, delizia prima
Del suo signor.
Egloga II. Tr. di Prospero Manara.
209. Vedi Giornale degli Scavi, Nuova Serie n. 13, 1870.
210.
Nè già di lei, che nuda il piè, calpesta

L’aspra selci, è miglior l’altra che ’l collo
Preme d’assiri lettighier giganti.
Satir. VI, 350. Tr. Gargallo.
211.
L’ippomane, gli incanti, i beveraggi,

Colchici dovrò dir?
Sat. VI. 133. — Tr. Gargallo.
212. «Porgi l’acqua fredda, o ragazzo.» Notisi il fridam per frigidam quanto
s’accosti alla nostra parola fredda.
213. «Una bianca m’apprese a odiar le brune.» Vedi Vol. I. Cap. Le Vie, ecc.
214. «Agli uomini di Nola augurano felicità le fanciulle di Stabia.»
215. Vedi Plauto: Asinaria Att. V, Scena 2, v. 76 e 84.
Ma dorme ancora il cuculo, o amatore,

Su ti leva e va a casa.
Il cocolo mio, vezzeggiativo delle amanti veneziane, ne sarebbe forse la
traduzione e l’applicazione, senza l’idea del disprezzo?
216. «Non è questo il luogo agli oziosi: passa oltre, o passeggiero.»
217.
Così del fuoco di sozza lucerna,

Brutta e incrostata il viso, il tetro odore
Del bordello al guancial recò d’Augusto.
Giovenale, Sat. VI. 130-131. Trad. Gargallo.
218. «E le misere madri di null’altro più pregavano se non che fosse loro
concesso di raccogliere l’estremo sospiro de’ figli.»
219. Trad. di Paolo Maspero.
220. Æneid. Lib. IX. 486. 487:
Ed io tua madre,
Io cui l’esequie eran dovute, e ’l duolo
D’un cotal figlio, non t’ho chiusi gli occhi.
221. Lib. III, v. 539-540.
Sol col tacito volto invoca i baci

E del padre la man che i rai gli chiuda.
222. «Affermavano passarsi sotto terra l’altra vita dei morti.» Tuscul. 1, 16.
223.
. . . . e con supremi
Richiami amaramente al suo sepolcro
Rivocammo di lui l’anima errante.
Æneid. Lib. III, 67, 68. Tr. Ann. Caro.
L’espression di Virgilio animam sepulcro condimus, resa letteralmente,

appoggia meglio la credenza da noi riferita, ed io però tradurrei:
L’anima sua chiudemmo entro il sepolcro.
224. La Cité Antique, Cap. 1.

225. «I diritti degli Dei Mani sono santi: questi datici da morte abbiansi come
numi e si onorino di spesa e di lutto.»
226. Lib. II, 22.
227. «Le anime di virtù maggiore si chiamano Mani, quelle che son nel nostro
corpo diconsi Genii; fuori di esso, Lemuri; se infestano colle loro
scorrerie le case, Larve; ma se pel contrario ci son favorevoli, si
chiamano Lari famigliari.» De Deo Socratis.
228. V. 91-96.
229. Virgilio, lib. VI, v. 219:
. . . . intorno al freddo corpo intenti

Chi lo spogliò, chi lo lavò, chi l’unse.
Trad. Ann. Caro.
230. Satira III. v. 261-267:
. . . . la buon’anima,
Che già siede novizia in riva a Lete,
Trema del tetro barcajuol, nè spera
Varcar su la sua barca il morto stagno;
Miser! nè il può senza il triente in bocca.
Tr. Gargallo.
231. Storia Popolare degli Usi Funebri Indo-Europei. Milano, Fratelli Treves,
1873, pag. 19. — Perchè alla vera dottrina è sempre gentilezza d’animo
congiunta, l’illustre scrittore mi volle onorato del dono di questa sua
opera, che mi tengo cara e della quale pubblicamente il ringrazio. E
come no, se a’ dì nostri solo compenso a chi si pasce di studio sono o la
noncuranza o la calunnia? Oggi è vezzo di portar la politica anche ne’
giudizi letterarii, e chi non s’imbranca coi gerofanti della politica è punito
colla cospirazione del silenzio.
232. Satira III, v. 103-105:
Quindi le tube e le funeree cere.

Steso e beato alfin nel cataletto,
E d’aromi inzuppato, irrigiditi
Slunga vêr l’uscio i piè...
Tr. Vinc. Monti.
233.
Di lutti non plebei teste il cipresso.
Pharsal. III, 442.
Spiacquemi non usar qui della versione notissima del conte F. Cassi,
perchè in questo passo si cavò d’impiccio, col dire semplicemente i
funebri cipressi.
234. Virgilio, Æneid. Lib IV, v. 665-668:
. . . . In pianti, in ululati
Di donne in un momento si converse
La reggia tutta, e insino al ciel n’andaro
Voci alte e fioche, e suon di man con elle.
Tr. A. Caro.
235.
. . . . Quiriti, a cui fa commodo

D’assistere alle esequie, è questa l’ora.
Phorm. 5. 8. 37.
Ecco per altro la formula più completa della convocazione al funerale:

exequias... (e . g . lucii. lucii. filii) quibus est comodum ire, tempus
est: ollus (ille) ex ædibus effertur.
236. «Io Sesto Anicio Pontefice attesto avere costui onestamente vissuto.»
Bannier, Spiegazione delle favole.
237. «Da qualche anno in qua non si offerse altro sguardo del popolo romano
una pompa così solenne e memorabile, come i publici funerali di Virginio
Rufo, non meno egregio ed illustre, che fortunato cittadino.» Lib. II.
epist. 1, Tr. Paravia.
238. «Detti furono siticini coloro che solevano cantare canti lamentevoli a
titolo d’onore, quando a taluno si facevano i funerali e recavansi a
seppellire.»
239.
Le prefiche che seguano pagate

Nell’altrui funeral e piangon molto
E si strappano i crini e ancor più forti
Alzan clamori.
240. Riti funebri di Roma. Lucca, 1758.

241.
Spargete lagrime,
Querele alzate,
Lutto e gramaglie
Or simulate,
Del triste coro
Echeggi il Foro.
242. In Vespasianum, 19.
243. Lib. II, Eleg. XIII:
Tu verrai dietro lacera

E petto ignudo e chiome,
Nè cesserai ripetere
Del tuo Properzio il nome.
Tr. Vismara.
244. Annali, III, 2.
245. «La nostra prosapia di tal guisa congiunge alla santità dei re, che assai
possono in mezzo agli uomini, la maestà degli dei che sono i padroni dei
re.» Svetonio, In Cæs. VI. Giulio Cesare da parte di madre si diceva
discendere da Anco Marzio, re.
246. Pag. 83.
247. La legge vietava la cremazione del cadaveri in città a prevenire gli

incendj. La basilica Porcia di Roma infatti erasi incendiata per le fiamme
dal rogo di P. Clodio.
248.
Sul freddo labbro gli ultimi

Baci tu allor porrai
Quando versar dall’onice
Assiri odor vedrai.
Id. Ibid.
249. «Addio: noi ti seguiremo tutti nell’ordine nel quale la natura avrà voluto.»
250. Lib. IV. Eleg. VII:
Perchè il favor su la mia pira, o ingrato,

Non invocar del vento?
Perchè non arder su l’estremo fato
Stilla di caro unguento?
E t’era grave ancor non compri fiori
Gittar sul mio feretro,
E al cenere libar del vin gli onori
Da lo spezzato vetro?
Trad. Vismara.
251. Phaleræ. Erano piastre d’oro, d’argento o altro metallo lavorate che si
portavano sul petto, come attesta Silvio Italico nell’emistichio:
. . . . phaleris hic pectora fulget, [252]
da persone di grado, che venivano accordate per fatti di valore, come si

farebbe oggidì colle decorazioni cavalleresche. Erano anche bardamenti
di cavalli.
252. «Di falere ha costui splendido li petto.»
253.
. . . . . Altri gridando
Le pire intorno, elmi, corazze e dardi
E ben guarnite spade e freni e ruote
Avventaron nel fuoco e de’ nemici
Armi d’ogni maniera, arnesi e spoglie;
Altri i lor proprii doni, e degli uccisi
Medesmi vi gittar l’armi infelici
E gli infelici scudi, ond’essi invano
S’eran difesi.
Lib. XI, 193-196. Tr. Caro.
254. Libro XXIII, 257-265. Trad. V. Monti.
255.
. . . . . in ordinanza
Tre volte armati a pie’ la circondaro
E tre volte a cavallo, in mesta guisa
Ululando, piangendo, e l’armi e ’l suolo
Di lagrime spargendo.
Lib. XI, 188-190.
256. Annal. Lib. II. VII. Il Davanzati così traduce: «Nè Cesare combattè gli
assedianti (i Catti), perchè al grido del suo venire sbandarono, spiantato
nondimeno il nuovo sepolcro delle legioni di Varo, per onoranza del
padre si torneò.» In nota a questo passo, Enrico Bindi, nell’edizione del
Le Monnier 1852 vol. I. p. 65, pose: «Di questo costume antichissimo
detto decursio, vedi Senofonte nel sesto di Ciro, Dione, 55; Svetonio in
Nerone. Il Lipsio cita Omero, Virgilio, Livio, Lucano e Stazio.»
257. Sat. Lib. I Sat. 8:
. . . . il camposanto
De la plebaglia...
Così traduce il Gargallo: ma non aveva proprio altro vocabolo da

sostituire a quello che la religion nostra ha consacrato?
Non potevasi, a mo’ d’esempio, esser più fedeli all’originale traducendo:
Alla misera plebe era codesto

Il comune sepolcro?
258. Gruter, Iscriz.:
Sull’ossa tue io verserò quel vino,

Che non bevesti mai, giovanettino.
259. Dizionario delle Antichità, alla voce Patera.
260. V. 124-129.
261. Epist. Ex Ponto, 1, Lib. III:
Uopo è che i corpi esangui ai mesti roghi,

Vengano dati.
262.
. . . . E di natura impero
Ma il pianto impon, se di fanciulla adulta
C’incontriam ne l’esequie, e se bambino,
Negato al rogo da l’età, si infossa.
Tr. Gargallo.
263. Pha. Hist. Nat. VII, 15.

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International Accounting 4th Edition

Doupnik Test Bank

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Multiple Choice Questions

A. $7,000,000,000 (7 billion dollars)

3. What is a "foreign exchange rate?"

A. The price to buy a foreign currency

A. It is the currency used by all countries in the European Union.

5. A bank exchanging foreign currency makes its profit in what manner?

A. Country X is using the Euro.

A. be pegged to another currency.

A. the spot rate.

A. the spot rate.

13. What is foreign exchange risk exposure?

A. The possibility of a loss because of changes in the value of a foreign currency

14. What is "asset exposure" to foreign exchange risk?

15. What is a foreign currency transaction?

A. It is another name for an international transaction.

A. A one-transaction perspective must be used.

A. A one-transaction perspective must be used.

A. The two-transaction perspective is required under IFRS.

A. debiting "Foreign Exchange Loss".

A. They should be deferred on the Balance Sheet until cash is received.

A. Yuan appreciated, Pound depreciated

A. Hedge of an unrecognized foreign currency firm commitment

A. The company has purchased a foreign currency option.

A. The company has acquired a call option.

38. What is a "strike price?"

A. The exchange rate that is used to buy a foreign currency today

40. What is the intrinsic value of a foreign currency option?

A. a debit to Cash for $200,000 on January 1, 2015.

A. There must be formal documentation of the hedging relationship.

45. What is "hedge accounting?"

A. Any record keeping related to purchase, sale, or valuation of derivatives.

A. Fair value exposure

A. Fair value exposure

A. The forward rate at the date the contract was entered

50. How is the fair value of a foreign currency option calculated?

A. By using the Box-Jenkins technique

A. As part of "Accumulated Other Comprehensive Income" on the Balance Sheet

A. The hedged asset or liability is adjusted to fair value.

A. Carried on the balance sheet until the contract is completed

A. Weighted average method or accelerated method

A. Debit Foreign Currency Option for $100,500.

A. No cash changes hands

A. no journal entry will be prepared on the date of sale.

60. Which of the following statements is true of intrinsic value of options?

Multiple Choice Questions

A. $7,000,000,000 (7 billion dollars)

Learning Objective: 07-01 Provide an overview of the foreign exchange market.

Learning Objective: 07-01 Provide an overview of the foreign exchange market.

A. The price to buy a foreign currency

Learning Objective: 07-01 Provide an overview of the foreign exchange market.

4. Which of the following statements is true about the Euro?

A. It is the currency used by all countries in the European Union.

Learning Objective: 07-01 Provide an overview of the foreign exchange market.

5. A bank exchanging foreign currency makes its profit in what manner?

Learning Objective: 07-01 Provide an overview of the foreign exchange market.

Learning Objective: 07-01 Provide an overview of the foreign exchange market.

A. Country X is using the Euro.

A. be pegged to another currency.

A. the spot rate.

A. the spot rate.