The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($/SF)....

The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($/SF).


Spot	$	0.8227
30-day forward	$	0.8554
90-day forward	$	0.8565
180-day forward	$	0.8612

a. Was the Swiss franc selling at a discount or premium in the forward market?

Discount
Premium

b. What was the 30-day forward premium (or discount) percentage? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

c. What was the 90-day forward premium (or discount) percentage? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

d. Suppose you executed a 90-day forward contract to exchange 350,000 Swiss francs into U.S. dollars. How many dollars would you get 90 days hence?

e. Assume a Swiss bank entered into a 180-day forward contract with Bankers Trust to buy $350,000. How many francs will the Swiss bank deliver in six months to get the U.S. dollars? (Round your answer to 2 decimal places.)

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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