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vladimir1956 [14]
3 years ago
15

Golden Apple, Inc., based in Washington, exports products to a French firm and will receive payment of €200,000 in three months.

On June 1, the spot rate of the euro was $1.12, and the 3-month forward rate was $1.10. On June 1, Golden Apple negotiated a forward contract with a bank to sell €200,000 forward in three months. The spot rate of the euro on September 1 is $1.15. Golden Apple will receive how many dollars for the euros?
Business
1 answer:
Anvisha [2.4K]3 years ago
6 0

Answer:

$220.000

Explanation:

On June 1, Golden Apple negotiated a forward contract with a bank to sell the €200.000 in three months at a rate of $1,10. On september 1, the rate is 1,15 but as there was a previous contract signed, the rate is $1,10 taking into account that this type of contracts determine the rate of interest that will be paid on a future date.

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