Nanuk is translated under the current rate method, so its translational exposure is its net asset position. The weakening CAD (see Exhibit 2) will generate a re-measurement loss in Sunjet’s other comprehensive income.
It is the net asset position that is exposed to exchange fluctuations under the current rate method. Per Exhibit 2, the CAD is depreciating vs. the USD so would generate a loss. Candidates may think the CAD is strengthening.
Nanuk’s net monetary liability position would generate a re-measurement gain under the temporal method, but it is the net asset position that is exposed to exchange fluctuations under the current rate method.

Even if LeCompte discloses the cost of her attendance she may still not be permitted to take the trip depending upon her company’s policies. In addition, the dis- closure in this case is not enough to avoid a potential violation of Standard I(B) relating to independence and objectivity. By allowing the corporate issuer to pay for her travel expenses her judgment could be compromised. It is more appropriate for LeCompte to decline the invitation or have her company pay all costs for the trip in order to avoid any conflict or appearance of conflict.
The actions are appropriate and would avoid poten- tial conflicts.

. Betta has taken the correct approach in using actual coupon bonds for Bay Corp and estimating implied zero-coupon bonds. Because the bonds rank equally, there is no need to adjust for differences in priority in case of default. In practice, bond prices will be affected by liquidity, and investors expect additional spread or a liquidity premium to compensate for less liquid corporate bonds relative to sovereign bonds.
because there is a need to convert coupon bonds to implied zero-coupon bonds to infer the spread.
because no adjustment is necessary for differences in priority since all the bonds in this case rank equally.

Hollingsworth;s preferred method of calculating the GDP growth rate is the Solow growth accounting equation, and the rate is calculated as follows:
ΔY/Y = ΔA/A + α(ΔK/K) + (1 – α)(ΔL/L) where
ΔY/Y = Growth in gross domestic product, GDP ΔA/A = Growth in total factor productivity = 1/5% ΔK/K = Growth rate of capital = 3.2%
ΔL/L = Growth rate of labor = 0.4%
α = Output elasticity of capital = 0.3
1 – α = Output elasticity of labor = 0.7
Thus, ΔY/Y = 1.5 + (0.3 × 3.2) + (0.7 × 0.4) = 1.5 + 0.96 + 0.28 = 2.74. The calculation did not apply (1 – α).
ΔY/Y = 1.5 + (0.3 × 3.2) + 0.4 = 1.5 + 0.96 + 0.4 = 2.86
The inflation rate was incorrectly used in place of TFP in the calculation.
ΔY/Y = 1.7 + (0.3 × 3.2) + (0.7 × 0.4) = 1.7 + 0.96 + 0.28 = 2.94

. Covey’s statement is based on the idea that a firm’s stock price increases if it is the target of an acquisition (i.e., a control premium). Consequently, when the acqui- sition failed with no apparent future threat of a takeover, the stock price decreases as the control premium vanishes. . The subsidiary of a conglomerate generally has a value that is below its stand-alone value due to a conglomerate discount.
. Pairs trading is a relative value strategy that does not consider the actual intrinsic value of a given firm.