If the forward premium of the euro is positive, the exchange market's consensus appears to be that over the period of a forward contract, the spot exchange rate value of the euro will:

Question

Quizplus · Accepted Answer

A positive forward premium indicates that the demand for the euro in the future is expected to increase, causing the spot exchange rate value of the euro to increase as well. Therefore, the exchange market's consensus is that the spot exchange rate value of the euro will increase over the period of the forward contract.

If the Forward Premium of the Euro Is Positive, the Exchange