Use the following information to answer questions 6-9.
Table 6.1: Spot and Forward Exchange Rates on May 5, 2012.

-Refer to Table 6.1.On May 5,2012,the 3-month forward yen was selling at a:

Question

Use the following information to answer questions 6-9.
Table 6.1: Spot and Forward Exchange Rates on May 5, 2012.
 
-Refer to Table 6.1.On May 5,2012,the 3-month forward yen was selling at a:

Quizplus · Accepted Answer

The 3-month forward yen is selling at 79.68, which is a 0.83% increase from the spot rate of 78.98. To calculate the annualized premium, we take (79.68/78.98)^(365/90)-1, which equals 9.72%. Therefore, the answer is B, a 9.72% premium per annum against the dollar.

Use the Following Information to Answer Questions 6-9