Suppose it is January 1,1998 and spot pounds are selling at $1.7342,while 90-day forward pounds are selling at $1.7156.At the same time,DM spot and 90-day forward rates are $0.6138 and $0.6014,respectively.According to these quotes the

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CTo determine the forward discount or premium, we compare the forward rate to the spot rate. For the pound relative to the DM, we calculate the percentage change from the spot rate to the forward rate for each currency and then compare them.- The pound's spot rate is $1.7342, and its 90-day forward rate is $1.7156. This represents a decrease, indicating a forward discount.- The DM's spot rate is $0.6138, and its 90-day forward rate is $0.6014, also indicating a forward discount.To find the exact percentages, we use the formula: [(Forward Rate - Spot Rate) / Spot Rate] * 100.However, the correct answer involves comparing the forward rates of the pound and DM directly or indirectly through their respective discounts or premiums against the dollar, not directly against each other as the options might misleadingly suggest. The given percentages and the direct comparison between the pound and DM in the options are not straightforwardly calculable from the provided data without additional steps or information (e.g., converting the forward and spot rates of one currency into the terms of the other). Therefore, the correct approach involves recognizing the forward discount for both currencies relative to the dollar, but the specific percentages provided in the options cannot be directly verified with the given information. The explanation aimed to clarify the concept rather than confirm the exact percentages, which require additional calculations or context not directly provided.

Suppose It Is January 1,1998 and Spot Pounds Are Selling