If the spot rate for the Japanese yen is $0.009204 and the 90-day forward rate is $0.009227, what is the approximate annualized forward premium (discount)?

Question

Quizplus · Accepted Answer

The annualized forward premium can be calculated using the formula: [(Forward Rate - Spot Rate) / Spot Rate] * (360 / Number of days). Plugging in the given values: [(0.009227 - 0.009204) / 0.009204] * (360 / 90) = 0.01 or 1.00%, indicating a premium of 1.00%.

If the Spot Rate for the Japanese Yen Is $0