Your company sold a 10 million Euro forward contract. The contract expires in six months. The current

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Question:

Your company sold a €10 million Euro forward contract. The contract expires in six months. The current exchange rate between US dollar and Euro is 1.23 USD/EUR in the spot marke and the 6-month Euro forward rate is 1.22 USD/EUR. After six months, the exchange rate between Euro and US dollar turns out to be 1.18USD/EUR in the spot market. Calculate the gain or loss on your company's forward contract.

A. $500,000 USD loss.

B. $400,000 USD gain.

C. $500,000 USD gain.

D. $400,000 USD loss.