If a European company opts to buy shirts from India with payment due in 60 days, it would be able to access the forward market to enter into a contract to lock in a future price for its payment.This would enable the European firm to protect itself against depreciation of the euro, which would require more euros to buy one Indian rupee.This contract is referred to as a(n):
A)option contract.
B)forward contract.
C)implicit contract.
D)voidable contract.
E)quasi-contract.

Question

Quizplus · Accepted Answer

A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date. In this scenario, the European company uses a forward contract to lock in the exchange rate for the future payment, protecting itself against currency fluctuations.

If a European Company Opts to Buy Shirts from India