IMXP CorpEnters into a 30-Day Forward Exchange Contract to Buy 113,540,000

question 89

Multiple Choice

IMXP Corp.enters into a 30-day forward exchange contract to buy 113,540,000 yen for $100,000.Which of the following statements is true concerning this transaction?

• A) IMXP will pay $100,000 and receive 113,540,000 yen 30 days from now.
• B) IMXP will pay $100,000 today and receive 113,540,000 yen 30 days from now.
• C) The spot exchange rate in 30 days will be 113.54 yen per dollar.
• D) IMXP will receive 113,540,000 yen today and pay $100,000 30 days from now.

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Definitions:

Countercurrent Exchange

A mechanism in which fluids flow in opposite directions, exchanging properties (such as heat or chemical constituents) to maximize transfer rates.

Gills

Respiratory organs in certain aquatic organisms, allowing them to extract oxygen from water.

Gases

Substances that are in the state of matter characterized by having neither a defined volume nor shape, expanding to fill their container.

Terrestrial

Terrestrial refers to things relating to the Earth or living or growing on land as opposed to water or air.