Question content area top

Part $1$

Forward Premium on the Dollar.$$Calculate the forward premium on the dollar if the spot rate is$$

euro $1\mathrm{.}3438$ equals $ $1\mathrm{.}001\mathrm{.}3438=$$$1\mathrm{.}00$

and the

$33-$month

forward rate is

euro $1\mathrm{.}3557$ equals $ $1\mathrm{.}001\mathrm{.}3557=$$$1\mathrm{.}00.$

$$Note: Use a$360-$day year.

Bs $1$ comma $029$ equals $ $1\mathrm{.}00$Bs$1,029=$$$1\mathrm{.}00.$

The Venezuelan political and economic crisis deepened in late $2002$ and early $2003.$

On January$1,2003,$ the bolivar was trading at

Bs $1$ comma $396$ equals $ $1\mathrm{.}00$Bs$1,396=$$$1\mathrm{.}00.$

By February$1,$ its value had fallen to

Bs $1$ comma $952$ divided by $Bs$1,952/$$$.$

Many currency analysts and forecasters were predicting that the bolivar would fall an additional

$41\%41\%$

from its February $1$ value by early summer $2003.$

a$.$ What was the percentage change in January$2003?$

b$.$ What is the forecast value for June$2003?$