Assume that a buyer of Italian wine saw the following quotes: spot rate of .9505 euros to the U.S. dollar; 30-day forward rate of .9497 euro to the U.S. dollar; 90-day forward rate of .9482 euros to the U.S. dollar. What does this information imply?
A) The forward euro is selling at a premium as compared with the spot euro.
B) The dollar is expected to maintain the same value in the near future relative to the euro.
C) The forward euro is selling at a discount as compared with the spot euro.
D) None of the above.
Correct Answer:
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