Car Corp (A U Assuming a Forward Contract Was Entered Into, the Foreign Currency

Multiple Choice

Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2013, with payment of 10 million Korean won to be received on January 15, 2014. The following exchange rates applied: $\begin{array}{lrr}&&\text { Forward }\\&\text { Spot}&\text { Rate }\\\text { Date }&\text { Rate}&\text { to Jan. } 15\\\hline\text { December 16, 2013 } & \$ .00092 & \text { \$. } 00098 \\\text { December 31, 2013 } & .00090 & .00093 \\\text { January 15, 2014 } & .00095 & .00095\end{array}$ Assuming a forward contract was entered into, the foreign currency was originally sold in the foreign currency market on December 16, 2013 at a

A) forward contract discount $600.
B) forward contract premium $600.
C) forward contract discount $980.
D) forward discount premium $980.
E) There is no premium or discount because the fair value of the contract is zero.