On December 3,2001,spot Japanese yen were sold at $0.008058.Suppose the 180-day forward Japanese yen was selling at a 1.91% annualized premium,what is the 180-day forward rate of the yen?

Question

Quizplus · Accepted Answer

The 180-day forward rate can be calculated by applying the annualized premium to the spot rate. The formula to adjust the spot rate for the premium over a specific period is: Forward Rate = Spot Rate * (1 + (Premium Rate * (Days/360))). Using the given spot rate of $0.008058 and an annualized premium of 1.91%, the calculation for a 180-day period is: 0.008058 * (1 + (0.0191 * (180/360))) = 0.008058 * (1 + 0.00955) = 0.008058 * 1.00955 ≈ 0.008135.

On December 3,2001,spot Japanese Yen Were Sold at $0