On November 2,20X9,Henry Company Purchased a Machine for 100,000 Swiss

question 4

Multiple Choice

On November 2,20X9,Henry Company purchased a machine for 100,000 Swiss francs (CHF) with payment requirement on March 30,20X10.To eliminate the risk of foreign exchange losses on this payable,Henry entered into a forward exchange contract on November 3,20X9 to receive CHF 100,000 at a forward rate of CHF1 = $2 on March 30,20X10.The spot rate was CHF1 = $1.95 on November 2,20X9 and CHF1 = $1.97 on December 1,20X9.What is the amount of the premium or discount on the forward exchange contract on December 1,20X9?

• A)A premium of $3,000
• B)A discount of $3,000
• C)A premium of $5,000
• D)A discount of $5,000

---

Definitions:

International Business

Commercial transactions that occur across national borders, involving the exchange of goods, services, technology, and capital.

Internet

A global network of interconnected computers and servers that enables the sharing of information and communication across vast distances.

Intrapreneurship

The practice of entrepreneurship within an established company, where employees are encouraged to innovate and pursue new business ideas.

Large Organisations

Large organisations are entities characterized by a vast scope of operations, numerous employees, and a wide geographic presence, typically requiring complex management structures.