土豆妮

Today, the spot rate on pounds sterling is $0.6960 and 90-day forward pounds are priced at $0.6925. The annualized forward discount is:

A) 2.022%.

B) 1.005%.

C) 2.012%.

土豆妮

Today, the spot rate on pounds sterling is $0.6960 and 90-day forward pounds are priced at $0.6925. The annualized forward discount is:

A) 2.022%.

B) 1.005%.

C) 2.012%.

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Forward discount = ($0.6925 ? $0.6960) / $0.6960 × (360 / 90) = -0.02012

土豆妮

The 90-day $/Euro forward rate is 0.9420 $/Euro. Given a forward premium of 0.0027 $/Euro, what is the annualized percentage forward discount or premium for the Euro?

A) 1.150%.

B) 1.146%.

C) 11.500%.

土豆妮

The 90-day $/Euro forward rate is 0.9420 $/Euro. Given a forward premium of 0.0027 $/Euro, what is the annualized percentage forward discount or premium for the Euro?

A) 1.150%.

B) 1.146%.

C) 11.500%.

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Since we have a forward premium, we have to subtract it from the forward rate to get the spot rate of 0.9393 $/Euro. (Note that the $ is weaker in the forward market as it takes more dollars to buy one Euro.)

The annualized percentage forward premium = (0.0027 / 0.9393) × (360 / 90) × 100 = 1.150%

土豆妮

The spot and 30-day forward rates for the Australian dollar (AUD) are USD0.3075 and USD0.3120, respectively. The AUD is selling at a forward:

A) premium of USD0.0045.

B) rate of USD0.3075.

C) discount of USD0.0045.

土豆妮

The spot and 30-day forward rates for the Australian dollar (AUD) are USD0.3075 and USD0.3120, respectively. The AUD is selling at a forward:

A) premium of USD0.0045.

B) rate of USD0.3075.

C) discount of USD0.0045.

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USD0.3120 – USD0.3075 = USD0.0045 premium.

luqian55

thanks

annyyu

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