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

question 87

Multiple Choice

IBM enters into a forward contract to purchase 100,000 euros at a rate of 1.60 USD/EUR one year from today.If the spot exchange rate is 2 USD/EUR 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
• E)$240,000

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