In December 2005,the Spot Exchange Rate for the British Pound

question 44

Essay

In December 2005,the spot exchange rate for the British Pound was $1.7188/£ and the one-year forward rate was $1.8675/£.Suppose that at the same time Luther Industries entered into a contract to purchase goods with a price of £375,000 to be delivered in one year.Simultaneously Luther entered into a one-year forward contract to purchase £375,000.What is the amount of the payment in U.S.dollars that Luther Industries will have to make in one year to pay for their goods?

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Definitions:

Superordinate Goals

Objectives that are important to more than one person or group, which encourage cooperation by requiring joint effort for successful achievement.

Conflict Management

The practice of identifying and handling conflicts in a sensible, fair, and efficient manner.

Productivity Improvement

Strategies and initiatives aimed at increasing the efficiency and effectiveness of work processes, leading to higher outputs for the same or less input.

Win-win Orientation

A negotiation approach where both parties aim to find a solution that benefits them both, resulting in a mutually beneficial outcome.