If the one-year forward rate for the dollar is 0.80 euro, while the current spot rate is 0.82 euro, the expected percentage change in the euro is ____% to the nearest percentage.
A) 0.03
B) 0.02
C) -0.02
D) None of the above

Question

Quizplus · Accepted Answer

The expected percentage change in the euro is calculated as (Forward rate - Spot rate) / Spot rate * 100 = (0.80 - 0.82) / 0.82 * 100 = -0.0244, which is approximately -0.02%.

If the One-Year Forward Rate for the Dollar Is 0