IBM Enters into a Forward Contract to Purchase 200 000

question 51

Multiple Choice

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

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Definitions:

Medullary Cavities

The central cavities of bone shafts where red bone marrow and/or yellow bone marrow (fat) are stored, crucial for the process of hematopoiesis.

Epiphyseal Lines

The remnants of growth plates in long bones, indicating where bone lengthening occurred.

Articular Cartilage

The smooth, white tissue that covers the ends of bones where they come together to form joints, enabling smooth movement and absorbing shocks.

Epiphyseal Plate

A layer of hyaline cartilage where growth in length of the long bones occurs.