If the spot rate (in U.S. dollars) for the Australian dollar is $0.559 and the 180-day forward rate is trading at a premium of 2.86%, what is the 180-day forward rate?

Question

Quizplus · Accepted Answer

To determine the 180-day forward rate, we need to add the forward premium to the spot rate.

Forward premium = 2.86% of $0.559 = $0.016

Forward rate = Spot rate + Forward premium 
= $0.559 + $0.016 
= $0.575

Therefore, the 180-day forward rate is $0.575, which is choice B.

If the Spot Rate (In U