土豆妮

The current spot rate quote is 2 USD/GBP. A 180 day forward discount for the GBP of 2% (annualized) would reflect a forward price of:

A) 2.02 GBP/USD.

B) 1.96 USD/GBP.

C) 1.98 USD/GBP.

土豆妮

The current spot rate quote is 2 USD/GBP. A 180 day forward discount for the GBP of 2% (annualized) would reflect a forward price of:

A) 2.02 GBP/USD.

B) 1.96 USD/GBP.

C) 1.98 USD/GBP.

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The GBP is at a forward discount if the forward rate expressed in USD/GBP is below the spot rate. Since the annualized discount is 2%, the 180 day forward discount is 1% of spot, or USD 0.02.

[(1.98 ? 2.00) / 2.00](360 / 180) = -2%

土豆妮

The forward rate on a 90-day contract is 5 DC/$ and the spot is 4 DC/$. The $ is trading at a forward:

A) premium of 1.0.

B) discount of 1.0.

C) premium of 0.8.

土豆妮

The forward rate on a 90-day contract is 5 DC/$ and the spot is 4 DC/$. The $ is trading at a forward:

A) premium of 1.0.

B) discount of 1.0.

C) premium of 0.8.

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A foreign currency is at a forward premium if the forward rate expressed in dollars is above the spot rate. Forward premium = forward rate – spot rate = 5 ? 4 = 1.

土豆妮

If the forward rate expressed in domestic currency units is above the spot rate, then the foreign currency is at a:

A) spot discount.

B) forward premium.

C) forward discount.

土豆妮

If the forward rate expressed in domestic currency units is above the spot rate, then the foreign currency is at a:

A) spot discount.

B) forward premium.

C) forward discount.

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A foreign currency is at a forward premium if the forward rate expressed in domestic currency is above the spot rate. Forward premium = forward rate – spot rate.

土豆妮

Today, the spot rate on Japanese yen is $0.008000 and 180-day forward yen are priced at $0.008250. The annualized forward premium is:

A) 6.250%.

B) 3.125%.

C) 6.060%.

土豆妮

Today, the spot rate on Japanese yen is $0.008000 and 180-day forward yen are priced at $0.008250. The annualized forward premium is:

A) 6.250%.

B) 3.125%.

C) 6.060%.

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Forward premium = ($0.008250 ? $0.008000) / $0.008000 × (360 / 180) = 0.0625 = 6.25%.

土豆妮

Isaac Long is an English investor. He notices the 90–day forward rate for the Norwegian kroner is GBP0.0859 and the spot rate is GBP0.0887. Long calculates the annualized rate of the kroner to be trading at a:

A) discount of 12.63%.

B) premium of 9.478%.

C) premium of 21.17%.

土豆妮

Isaac Long is an English investor. He notices the 90–day forward rate for the Norwegian kroner is GBP0.0859 and the spot rate is GBP0.0887. Long calculates the annualized rate of the kroner to be trading at a:

A) discount of 12.63%.

B) premium of 9.478%.

C) premium of 21.17%.

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[(forward rate ? spot rate) / spot rate] × (360 / number of forward contract days) = [(0.0859 ? 0.0887) / 0.0887] × (360 / 90) = ?0.1263 or ?12.63%.