The SF/$ spot exchange rate is SF1.25/$ and the 180 day forward premium is 8 percent. What is the outright 180 day forward exchange rate?

Name: The SF/$ spot exchange rate is SF1.25/$ and the 180 day forward premium is 8 percent. What is the outright 180 day forward exchange rate?
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Question

Quizplus · Accepted Answer

180 day forward exchange rate = Spot rate x (1 + forward premium)
= SF1.25/$ x (1 + 8%)
= SF1.25/$ x 1.08
= SF1.35/$. 
Therefore, the outright 180 day forward exchange rate is SF1.35/$, which corresponds to option A.

The SF/$ Spot Exchange Rate Is SF1