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Vroom Motors Purchased Several Mercedes Benz Automobiles from Its West

Question 26

Multiple Choice

Vroom Motors purchased several Mercedes Benz automobiles from its West German broker.The contract was for 10,000,000 euros, due in 180 days.The present exchange rate is $0.51 per euro and the 180 day forward rate is $0.514.If the rate actually goes to $0.50 in 180 days, what is the dollar gain or loss incurred if no hedge is taken relative to a hedged position?


A) $392,157 gain
B) $40,000 loss
C) $100,000 gain
D) $140,000 gain

Correct Answer:

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