IBM Enters into a Forward Contract to Purchase 200 000

question 44

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)$300 000
• C)$225 000
• D)$400 000

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Definitions:

Situational Leadership Model

A leadership theory proposing that effective leaders adjust their style according to the maturity and competency of their followers.

Task Behavior

The actions and activities an individual undertakes to achieve a specific objective.

Relationship Behavior

Actions and interactions that define the nature of relationships between individuals or groups.

Subordinates

Employees or team members who are ranked lower within an organization's hierarchy and report to a supervisor or manager.