Question: Table 28.1 shows the 90-day forward rate on the Thai baht. a. Is the dollar at a forward discount or premium on the baht? b.

Table 28.1 shows the 90-day forward rate on the Thai baht.

Forward Rate Spot Rate* 1 Month 3 Months 1 Year Europe: EMU

a. Is the dollar at a forward discount or premium on the baht?

b. What is the annual percentage discount or premium?

c. If you have no other information about the two currencies, what is your best guess about the spot rate on the baht three months hence?

d. Suppose that you expect to receive 100,000 baht in three months. How many dollars is this likely to be worth?

Forward Rate Spot Rate* 1 Month 3 Months 1 Year Europe: EMU (euro) 9094 .9088 .9076 .9057 Norway (krone) Sweden (krona) Switzerland (franc) United Kingdom (pound) 8.8756 10.3159 8.9006 8.9594 9.1889 10.3221 10.3389 10.4034 1.6680 1.6677 1.6667 1.6563 1.4483 1.4468 1.4432 1.4289 Americas: Canada (dollar) Mexico (peso) 1.5397 9.1390 1.5403 9.1865 1.5415 1.545 9.307 9.924 Pacific/Africa: Hong Kong (dollar) Japan (yen) Singapore (dollar) South Africa (rand) Thailand (baht) 7.7999 7.7987 7.7962 119.66 7.7954 120,700 120.36 116.535 1.7542 1.7525 1.7491 1.7322 8.3693 8.4963 44.555 8.8278 45.295 8.4102 44.3450 44.39

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