Swift’s functional currency is the AUD because sales are generated in AUD and the company operates within the competitive and regulatory environment of Australia. Under IFRS, when the subsidiary’s functional currency is the local currency, translations are done using the current rate method. Thus, Swift will use the current rate method for converting its financial statements.
The use of the current rate method depends on the identification of the functional currency, not on the local currency. Translations from the functional currency to the presentation currency is done using the current rate method. The local currency has an impact on translation only where it differs from the functional currency. In these cases, the translation from the local to the functional currency is done using the temporal method.
Swift’s functional currency is the AUD, not the USD, because sales are generated in AUD and the company operates within the competitive and regulatory environment of Australia. If it were the USD this answer would be correct.

. Annisquam is incorrect in Comment 1. The interest rate tree performs two functions in the valuation process: (1) generating the cash flows that are interest rate dependent and (2) supplying the interest rates used to determine the present value of the cash flows.
because Comment 3 is correct. because Comment 2 is correct.

. 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.

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.

. The investment committee is correct in that direct real investment will likely generate income and price appreciation, but their view on the diversification is incorrect. Real estate returns generally have low correlations with returns on other assets classes, such as stocks and bonds, and thus allow the endowment to diversify portfolio risk.
. Investors in direct real estate can expect to generate income by leasing or renting the property.
. Investors in direct real estate can expect price appreciation on the real estate investment.