The difference between the spot rate on October 1 and the forward rate is

Question

Quizplus · Accepted Answer

The forward rate is the expected future exchange rate, and it can differ from the spot rate on a given day due to factors such as interest rates and market expectations. If the forward rate is higher than the spot rate, it is said to be at a premium; if it is lower, it is said to be at a discount. Therefore, if the spot rate on October 1 is lower than the forward rate, it is at a discount, and the difference between them represents a premium loss.

The Difference Between the Spot Rate on October 1 and the Forward