An Investor Enters into a Forward Contract to Purchase 100,000 $+ \$ 198,600.00$

question 8

Multiple Choice

An investor enters into a forward contract to purchase 100,000 shares of IBM stock in 2 months at prices of $105 per share. After one month, the investor notes that the forward price for the same contract (which now has a one-month maturity) is $103 per share. She also notes that the one-month discount factor is 0.993. The value of the forward contract held by the investor is

• A) \(+ \$ 198,600.00\)
• B) \(- \$ 198,600.00\)
• C) \(+ \$ 200,000.00\)
• D) \(+ \$ 201,409.90\)

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Definitions:

Manufacturing Overhead

Indirect costs related to manufacturing, including utilities, maintenance, and salaries of support staff.

Production Supervisors

Individuals responsible for overseeing the production process and ensuring that manufacturing goals are met.

Direct Cost

Expenses that can be directly traced to a product, service, or department, such as raw materials or labor.

Cost Object

Any item for which cost is measured and assigned, including products, services, projects, departments, or activities.