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

question 63

Multiple Choice

IBM enters into a forward contract to purchase 200,000 euros at a rate of $1.50/euro one year from today.If the spot exchange rate is $2/euro 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

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Definitions:

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