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Consolidated Financial Statements Practice Test
•5 QuestionsQuestion
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Q1
On December 1, Year 1, the Fairfax Company signs a contract to receive 1 million Euros on January 31, Year 2 at a price of \$1.1 million in a two month forward contract. On December 1, the spot rate for Euros is \$1.1 in US dollars. Why would Fairfax enter into this contract?
On December 1, Year 1, the Fairfax Company signs a contract to receive 1 million Euros on January 31, Year 2 at a price of \$1.1 million in a two month forward contract. On December 1, the spot rate for Euros is \$1.1 in US dollars. Why would Fairfax enter into this contract?