If the forward rate is greater than the spot rate on a direct quote basis, the foreign currency would be selling at a

Question

Quizplus · Accepted Answer

A forward rate that is greater than the spot rate on a direct quote basis means that the foreign currency is selling at a higher price in the future than it is currently selling for. This indicates that there is a premium on the foreign currency, since buyers are willing to pay more for it in the future than they would today.

If the Forward Rate Is Greater Than the Spot Rate