You Enter into a Forward Contract to Take Delivery of 1

question 89

Multiple Choice

You enter into a forward contract to take delivery of 1 million euros 3 months from now.What happens to the price you will pay at expiration if marks depreciate during the contract?

• A) Your price will increase.
• B) Your price will decrease.
• C) Your price was fixed at the onset of the contract.
• D) Your price was fixed, and you will receive correspondingly more marks due to the depreciation.

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Definitions:

Comprehensive Income

The total change in equity for a business enterprise during a period from transactions and other events from non-owner sources, including all non-owner changes in equity.

Unrealized Gains

Increases in the value of an asset that are not realized through a sale.

Property

A possession or asset that may be owned by an individual, business, or organization, including tangible items like buildings or land and intangible items like intellectual property.