The annualized forward premium on the euro is 7 percent. What is the 90-day forward rate on the euro if the spot rate today is $1.25?

Name: The annualized forward premium on the euro is 7 percent. What is the 90-day forward rate on the euro if the spot rate today is $1.25?
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Question

​The annualized forward premium on the euro is 7 percent. What is the 90-day forward rate on the euro if the spot rate today is $1.25?

Quizplus · Accepted Answer

The annualized forward premium of 7 percent for a 90-day period is calculated as 7% * (90/360) = 1.75%. Therefore, the 90-day forward rate is $1.25 * (1 + 0.0175) = $1.271875, which rounds to $1.27.

​The Annualized Forward Premium on the Euro Is 7 Percent

The Annualized Forward Premium on the Euro Is 7 Percent