Session 4: Economics: Economics for Valuation
Reading 18: Currency Exchange Rates
LOS i: Distinguish between spot and forward transactions, calculate the annualized forward premium/discount for a given currency, and infer whether the currency is "strong" or "weak."
Doug Wyatt is a currency trader for Global Currency Exchange Inc. Wyatt has compiled the following information concerning the U.S. dollar ($) / Australian dollar (AUD) exchange rate.
- Spot bid rate: $0.745.
- Spot ask rate: $0.749.
- 3-month forward bid rate: $0.752.
- 3-month forward ask rate: $0.754.
Which of the following statements concerning the currencies is CORRECT?
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A) |
The AUD is selling at a forward discount of 4.83%. | |
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B) |
The AUD is selling at a forward premium of 4.83%. | |
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C) |
The AUD is selling at a forward premium of 3.21%. | | | 
发表于 2010-4-13 16:24
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