Multiple Choice
The €/$ spot exchange rate is $1.50/€ and the 120 day forward exchange rate is 1.45/€.The forward premium (discount) is
A) the dollar trading at an 8% premium to the euro for delivery in 120 days.
B) the dollar trading at a 5% premium to the Swiss franc for delivery in 120 days.
C) the dollar trading at a 10% discount to the euro for delivery in 120 days.
D) the dollar trading at a 5% discount to the euro for delivery in 120 days.
Correct Answer:
Verified
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