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Question: 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 company's 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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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92604789

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