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

Question 11

Multiple Choice

Assume 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) $225,000
C) $400,000
D) $300,000

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