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

question 3

Multiple Choice

IBM enters into a forward contract to purchase 200,000 euros at a rate of 1.90 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)$300,000
• B)$325,000
• C)$380,000
• D)$400,000
• E)$240,000

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Definitions:

Vision

The ability to think about or plan the future with imagination or wisdom, often related to the goals or direction of an organization or individual.

Moving Assembly Line

A production process that breaks down a complex job into a series of smaller tasks, which are completed by a sequence of workers or machines moving the product along a line.

Achievement-oriented

A focus and drive on the accomplishment of specific goals or standards, often in the context of work or competitive environments.

Social Motives

Internal drives that influence individuals to seek or engage in activities that involve others, promoting social interactions.