Question: About three years ago the following spot and forward rates

About three years ago, the following spot and forward rates for the British pound ($/£) were reported:
Spot......... $1.525
30-day forward...... $1.522
90-day forward...... $1.520
180-day forward.... $1.514
a. Was the British pound selling at a discount or premium in the forward market?
b. What was the 30-day forward premium (or discount)?
c. What was the 90-day forward premium (or discount)?
d. Suppose you executed a 90-day forward contract to exchange 100,000 British pound into U.S. dollars. How many dollars would you get 90 days hence?

View Solution:

Sale on SolutionInn
  • CreatedSeptember 19, 2013
  • Files Included
Post your question