Vroom 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:
Verified
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