Assume that the Euro is selling in the spot market for $1.10.Simultaneously,in the 3- month forward market the Euro is selling for $1.12.Which one of the following statements correctly describes this situation?
I.The euro is selling at a premium relative to the dollar.
II.The dollar is selling at a premium relative to the euro.
III.The dollar is selling at a discount relative to the euro.
IV.The euro is selling at a discount relative to the dollar.
A) I and II only
B) I and III only
C) II and IV only
D) III and IV only
E) I and IV only
Correct Answer:
Verified
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