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Question 4 On December 1 of 2017, APU, a U.S. company, makes a sale to a Spanish customer. Sales price is 1,200,000 euro, and the
Question 4 On December 1 of 2017, APU, a U.S. company, makes a sale to a Spanish customer. Sales price is 1,200,000 euro, and the spot rate is $1.45 per euro. APU allows the customer 3 months to pay. On March 1 of 2018, APU collects the sales amount with spot rate $1.42 per euro. Let's assume that on December 1 of 2017 the company enters a foreign currency forward contract to sell 1.200.000 euro at a forward rate (for March 1 of 2018) of $1.43. Q1. How much would the gain or loss be with the forward contract in USD? 1. Loss 36000 2. Loss 24000 3. Loss 12000 4. Gain 12000 5. Gain 24000 6. Gain 36000 Q2. How much would the net benefit or net loss from having the forward contract be in USD? * If the net benefit is minus, we call it as the net loss here (e.g. net benefit -9000 = net loss 9000) 1. Net loss 36000 2. Net loss 24000 3. Net loss 12000 4. Net benefit 12000 5. Net benefit 24000 6. Net benefit 36000
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