A currency sells at a forward premium when the forward rate is greater than the spot rate.

Question

Quizplus · Accepted Answer

This statement is true. A currency is said to be selling at a forward premium when the forward rate (the rate at which the currency can be exchanged at a future date) is higher than the spot rate (the current exchange rate). This indicates that the market has a positive view on the currency's future value, and investors are willing to pay a premium to secure the currency at the higher forward rate.

A Currency Sells at a Forward Premium When the Forward