If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ____ to the spot rate.
A) premium of 8%
B) premium of 18%
C) discount of 18%
D) discount of 8%
E) premium of 16%

Question

Quizplus · Accepted Answer

The forward rate is higher than the spot rate, indicating a discount. The percentage discount is calculated as ((5.97 - 5.51) / 5.97) * 100 = 7.71%, which rounds to 8%.

If the Spot Rate of the Israeli Shekel Is 5