2. Calculate the value of the forward contract at each of the above dates and indicate how the changes in each of these values would be accounted for if the contract hedged: (a) an unrecognized FC...

2. Calculate the value of the forward contract at each of the above dates and indicate how the changes in each of these values would be accounted for if the contract hedged: (a) an unrecognized FC firm commitment (b) a recognized FC-denominated liability. Assume a 6% interest rate for any discounting purposes.

3. In part (2), assume that the two hedged items involved the purchase of inventory. Explain how the changes in value of the hedging instruments would affect the basis of the inventory.