I need explanations about a,b,c

Problem 5.2 Forward Premiums on the Japanese Yen Use the following spot and forward bid-ask rates for the Japanese yen/U.S. dollar (\/$) exchange rate from September 16, 2010, to answer the following questions: Period spot 1 month 2 months 3 months 6 months 12 months 24 months \/S Bid Rate 85.41 85.02 84.86 84.37 83.17 82.87 81.79 \/S Ask Rate 85.46 85.05 84.90 84.42 83.20 82.91 81.82 a. What is the mid-rate for each maturity? b. What is the annual forward premium for all maturities? c. Which maturities have the smallest and largest forward premiums? Since the exchange rate quotes are indirect quotes on the dollar (\/$), the proper forward premium calculation is: Forward premium = ( Spot - Forward)/(Forward) x (360 / days) b. Forward Premium Days Forward Period spot 1 month 2 months 3 months 6 months 12 months 24 months 30 60 90 180 360 720 W/S Bid Rate 85.41 85.02 84.86 84.37 83.17 82.87 81.79 \/S Ask Rate 85.46 85.05 84.90 84.42 83.20 82.91 81.82 a. Calculated Mid-Rate 85.43500 85.03500 84.88000 84.39500 83.18500 82.89000 81.80500 5.6447% 3.9232% 4.9292% 5.4096% 3.0703% 2.2187% The forward rates progressively require fewer and fewer Japanese yen per dollar than the current spot rate. Therefore the yen is selling forward at a premium and the dollar is selling forward at a discount. c. Which maturities have the smallest and largest forward premiums? The 24 month forward rate has the smallest premium, while the 1 month forward possesses the largest premium