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

question 3

Multiple Choice

IBM enters into a forward contract to purchase 200,000 euros at a rate of 1.90 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)$300,000
• B)$325,000
• C)$380,000
• D)$400,000
• E)$240,000

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