Table 11.4.Forward Exchange Rates

-Refer to Table 11.4.Comparing the franc's forward rates against the franc's spot rate,the exchange market's consensus is that over the period of a forward contract,the franc's spot rate will:
A) Depreciate against the dollar
B) Appreciate against the dollar
C) Remain constant against the dollar
D) None of the above

Question

Table 11.4.Forward Exchange Rates
 
-Refer to Table 11.4.Comparing the franc's forward rates against the franc's spot rate,the exchange market's consensus is that over the period of a forward contract,the franc's spot rate will:
A) Depreciate against the dollar 
B) Appreciate against the dollar 
C) Remain constant against the dollar 
D) None of the above

Quizplus · Accepted Answer

The forward rates for the franc are at a premium (higher than) the spot rate for all maturities, indicating that the market expects the franc to depreciate against the dollar over the period of a forward contract.