When the forward price of a currency ________ the spot price,the currency is said to sell at a ________.
A) Greater than, flat
B) Greater than, discount
C) Less than, discount
D) Less than, premium

Question

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When the forward price of a currency is less than the spot price, the currency is said to sell at a discount. This is because investors can buy the currency at a lower price in the forward market than they would have to pay in the spot market, resulting in a discount. Option A and B are incorrect as they state that the forward price is greater than the spot price, which is not indicative of a discount. Option D is incorrect as it states that the currency is selling at a premium, which is the opposite of a discount.

When the Forward Price of a Currency ________ the Spot