You entered into short forward contract to sell 62,500 at $1.2600/. At expiration of the forward contract,

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Question:

You entered into short forward contract to sell £62,500 at $1.2600/£. At expiration of the forward contract, the exchange rate is $1.3000/£. What cash settlement from long to short (or short to long) will fairly settle the contract without the involvement of actually transferring €500,000?

Group of answer choices

$78,750 from short to long

$2,500 from short to long

$78,750 from long to short

$2,500 from long to short