If you buy Yen forward when the Yen is selling at a forward premium, you will get:
A)More Yen than if you buy on spot market
B)Fewer Yen than if you buy on spot market
C)The same number of Yen as on the spot market, but with a lower commission
D)The expectation of more Yen, but the difference is not locked in

Question

Quizplus · Accepted Answer

When a currency is selling at a forward premium, it means that the market expects the currency to be worth more in the future than it is currently. Therefore, if you buy the currency forward, you will receive fewer units of the currency than if you were to buy it on the spot market. However, the advantage of buying it forward is that you can lock in the exchange rate and protect yourself against any future depreciation of the currency.

If You Buy Yen Forward When the Yen Is Selling