Respond to given statements.
Question 1. All hedging relationships must be "highly effective" to qualify for special financial treatment. What is meant by the term highly effective and why is its measurement important for financial managers?
Question 2. All hedging relationships must be "highly effective" to qualify for special financial treatment. What is meant by the term highly effective and why is its measurement important for financial managers?
Question 3. If a U.S. company uses the current rate method to translate the financial statements of foreign subsidiary A into dollars and the currency of country A is strengthening against the dollar, would you expect the U.S. company to recognize translation gains or losses? Where would these gains or losses show up in the financial statements?
Question 4. If a U.S. company uses the current rate method to translate the financial statements of foreign subsidiary A into dollars and the currency of country A is strengthening against the dollar, would you expect the U.S. company to recognize translation gains or losses? Where would these gains or losses show up in the financial statements?