What was the annualized forward premium on the pound if the spot rate on January 20, 2005 was £0.5156$ and the 180 day forward rate was £0.5000/$?

Question

Quizplus · Accepted Answer

The forward premium is calculated as ((Forward Rate - Spot Rate) / Spot Rate) * (360/180) * 100. Substituting the given values: ((0.5000 - 0.5156) / 0.5156) * 2 * 100 = -6.24%. Since the question asks for the premium, we take the absolute value, which is 6.24%.

What Was the Annualized Forward Premium on the Pound If