The SF/$ spot exchange rate is 1.25 and the 180 forward exchange rate is 1.30.Assuming 360 days in a year,the forward premium (discount) is:
A) The dollar is trading at an 8% premium to the Swiss franc for delivery in 180 days.
B) The dollar is trading at a 4% premium to the Swiss franc for delivery in 180 days.
C) The dollar is trading at an 8% discount to the Swiss franc for delivery in 180 days.
D) The dollar is trading at a 4% discount to the Swiss franc for delivery in 180 days.
Correct Answer:
Verified
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