Assume that the pound is selling in the spot market for €1.10.Simultaneously, in the 3-month forward market the pound is selling for €1.12.Which one of the following statements correctly
Describes this situation?
A) The spot market is out of equilibrium.
B) The forward market is out of equilibrium.
C) The pound is selling at a premium relative to the euro.
D) The Euro is selling at a premium relative to the pound.
E) None of the other four statements correctly describes this situation.
Correct Answer:
Verified
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