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

question 1

Multiple Choice

Assume 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:

Misleading Information

Incorrect or twisted information which leads to false impressions or conclusions.

Motivated Forgetting

A psychological process in which individuals subconsciously or consciously block out memories or information that is painful, embarrassing, or otherwise unpleasant.

Anxiety-Arousing Memories

Psychological phenomena where past memories cause significant distress due to their disturbing nature.

Conscious Awareness

is the state of being aware of one's own existence, sensations, thoughts, surroundings, and actions.