Bank of America quoted the 180-day forward rate on the Japanese yen at $0.009702/¥. The spot rate was quoted at $0.009466/¥. What is the forward premium or discount on the Japanese yen? (Round your final answer to the nearest percentage.)

Question

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First, you need to calculate the difference between the spot rate and the forward rate:

Forward rate - Spot rate = $0.009702/¥ - $0.009466/¥ = $0.000236/¥

Then, you can calculate the forward premium or discount as a percentage of the spot rate:

Forward premium/discount = (Forward rate - Spot rate) / Spot rate x 100%
Forward premium/discount = ($0.000236/¥) / $0.009466/¥ x 100%
Forward premium/discount = 2.49%

Rounded to the nearest percentage, the answer is C: 5% premium.

Bank of America Quoted the 180-Day Forward Rate on the Japanese