IBM Enters into a Forward Contract to Purchase 100,000 Euros

question 72

Multiple Choice

IBM enters into a forward contract to purchase 100,000 euros at a rate of $1.60/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)$100,000
• B)$160,000
• C)$200,000
• D)$300,000

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Definitions:

Arrested

The act of being taken into custody by law enforcement officials for the suspicion of having committed a crime.

Actual Violence

Real acts of physical aggression or harm directed towards others, as opposed to threats or verbal abuse.

Armed Robbery

The act of stealing from someone or somewhere using weapons, constituting a serious and violent crime.

Primary Motive

The primary motivation or cause that influences a person's conduct or actions.