On June 1, 2020, the Euro had a spot rate of .9098 per USD. The 6-month...

On June 1, 2020, the Euro had a spot rate of .9098 per USD. The 6-month forward rate of the Euro was .9007 on that date. What is the forward premium or discount?

	A.	2% forward discount
	B.	2% forward premium
	C.	4% forward discount
	D.	4% forward premium

Solutions

Expert Solution

Forward Premium (discount) = FR-SR/SR * 12/6

=0.9007-0.9098/0.9098 *12/6
=-0.0091/0.9098*12/6
-0.0091
=-2%

Forward discount =2%

Correct Option : A. 2% forward discount

jeff jeffy answered 1 year ago

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