Assume that the annualized forward premium is 1 percent and that the spot rate is 2.00 $/pound.What would the one-year forward rate have to be?
A) 1.76
B) 1.98
C) 2.02
D) 2.24

Question

Quizplus · Accepted Answer

The one-year forward rate is calculated by applying the annualized forward premium to the spot rate. Given a 1 percent premium and a spot rate of 2.00 $/pound, the forward rate would be 2.00 * 1.01 = 2.02 $/pound.

Assume That the Annualized Forward Premium Is 1 Percent and That