The SF/$ spot exchange rate is SF1.25/$ and the 180 day forward exchange rate is SF1.30/$. The forward premium (discount) is

Question

Quizplus · Accepted Answer

The forward premium is calculated as (F-S)/S * 360/n, where F is the forward rate, S is the spot rate, and n is the number of days. In this case, the forward premium is (1.30-1.25)/1.25 * 360/180 = 0.08, or 8%. This means that the dollar is trading at an 8% premium to the Swiss franc for delivery in 180 days.

The SF/$ Spot Exchange Rate Is SF1