IBM sold a service package to the French energy company Total on credit and invoiced 10 million payable in six months. Currently, the six-month forward exchange rate is $1.10/ and the foreign exchange advisor for IBM predicts that the spot rate is likely to be $1.05/ in six months.

What is the expected gain/loss from the forward hedging?

Select one:

a. gain,$50,000

b. gain,$500,000

c.loss,$500,000

d.loss,$50,000