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On December 1, 2014, SMC entered into a transaction to import raw materials from a foreign country. The account is to be settled March 1
On December 1, 2014, SMC entered into a transaction to import raw materials from a foreign country. The account is to be settled March 1 with the payment of 50,000 euros. The spot rates and the forward rates on various dates are as follows: Spot Rate Forward Rate Date $ per euro (March 1 Settlement) Dec. 1 $1.00 $1.03 March 1 $1.04 $1.04 To hedge the companys accounts payable position, SMC should: buy a forward contract to sell 50,000 euros on March 1. buy a forward contract to purchase 50,000 euros on March 1. none of these.
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