If the spot rate is AUD/USD 0.5526-0.5531 and the 90-day forward rate is AUD/USD 0.5578-0.5588,the AUD is trading at a/an:
A) expected gain.
B) premium.
C) reciprocal.
D) discount.

Question

Quizplus · Accepted Answer

The forward rate is higher than the spot rate, indicating that the AUD is trading at a premium. This means that the market expects the AUD to appreciate against the USD over the next 90 days.

If the Spot Rate Is AUD/USD 0