Forward Premium on the Dollar. Calculate the forward premium on the dollar if the spot rate is
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Question:
Forward Premium on the Dollar. Calculate the forward premium on the dollar if the spot rate is
$1.5927=£1.00
and the
6-month
forward rate is
$1.5456=£1.00.
Note: Use a 360-day year.
Part 1
The forward premium on the dollar is % (round to 4 decimal places)
The premium indicates that the pound is selling forward at a ??? to the dollar, and simultaneously, the dollar is selling forward at a ??? to the pound. That is, the forward rate requires fewer U.S. dollars in exchange for pounds than the current spot rate.
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