If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ____ to the spot rate.

Question

Quizplus · Accepted Answer

(5.97 - 5.51)/5.51 = 0.083 » 8%.Because one can obtain more Israel shekels for a dollar in the forward market, the forward currency is selling at an 8% discount to the spot rate.

If the Spot Rate of the Israeli Shekel Is 5