Here are direct spot and forward markets quotes for EUR over three points in time: now (1/1/XX), one month later (2/1/XX), three months later (4/1/XX), and six months later (7/1/XX). 1/1/XX 2/1/XX 4/1/XX 7/1/XX EUR Spot 1.3075 1.3006 1.3605 1.3296 1 Month Forward 1.3271 1.3201 1.3809 1.3496 3 Month Forward 1.3470 1.3399 1.4016 1.3698 6 Month Forward 1.3672 1.3600 1.4226 1.3904 On 1/1/XX, Dell sold a 6 month forward contract of EUR 1,000,000 to Chase. As a result IBM will incur a when the contract expires: O Loss of $37,600 O Profit of $37,600 O Loss of $23,00 O Profit of $23,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Here are direct spot and forward markets quotes for EUR over three
points in time: now (1/1/XX), one month later (2/1/XX), three months
later (4/1/XX), and six months later (7/1/XX).
1/1/XX
2/1/XX
4/1/XX
7/1/XX
EUR Spot
1.3075
1.3006
1.3605
1.3296
1 Month Forward
1.3271
1.3201
1.3809
1.3496
3 Month Forward
1.3470
1.3399
1.4016
1.3698
6 Month Forward
1.3672
1.3600
1.4226
1.3904
On 1/1/XX, Dell sold a 6 month forward contract of EUR 1,000,000 to
Chase. As a result IBM will incur a
when the contract expires:
O Loss of $37,600
O Profit of $37,600
O Loss of $23,00
O Profit of $23,000
Transcribed Image Text:Here are direct spot and forward markets quotes for EUR over three points in time: now (1/1/XX), one month later (2/1/XX), three months later (4/1/XX), and six months later (7/1/XX). 1/1/XX 2/1/XX 4/1/XX 7/1/XX EUR Spot 1.3075 1.3006 1.3605 1.3296 1 Month Forward 1.3271 1.3201 1.3809 1.3496 3 Month Forward 1.3470 1.3399 1.4016 1.3698 6 Month Forward 1.3672 1.3600 1.4226 1.3904 On 1/1/XX, Dell sold a 6 month forward contract of EUR 1,000,000 to Chase. As a result IBM will incur a when the contract expires: O Loss of $37,600 O Profit of $37,600 O Loss of $23,00 O Profit of $23,000
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