IBM Enters into a Forward Contract to Purchase 200,000 Euros

question 60

Multiple Choice

IBM enters into a forward contract to purchase 200,000 euros at a rate of 1.50 USD/EUR one year from today.If the spot exchange rate is 2 USD/EUR one year later,what is the dollar amount that IBM must pay to receive the euros?

• A)$200,000
• B)$225,000
• C)$400,000
• D)$300,000
• E)$250,000

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Definitions:

Fragmentation Corollary

A principle suggesting that an individual's belief system is composed of many independent elements that can contradict one another, allowing for adaptability and change in different contexts.

Corollary

A proposition that follows from one already proven, used in the context of personal construct theory to explain how individuals anticipate events by the application of their personal constructs.

Dichotomy Corollary

A principle in George Kelly's personal construct theory which posits that a person's constructs are arranged in a bipolar manner, representing dichotomous ways of categorizing the world.

May's Four Types

A categorization of personality types developed by Rollo May, outlining different orientations of an individual's being-in-the-world or ways of interacting with their environment.