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Questions and Answers
What is the direction of the forward exchange rate for the US dollar after three months?
What is the direction of the forward exchange rate for the US dollar after three months?
- It is at a discount
- It is at a premium (correct)
- It remains unchanged
- It is impossible to determine
What is the value of the premium (or discount) for the US dollar's forward exchange rate after three months?
What is the value of the premium (or discount) for the US dollar's forward exchange rate after three months?
- It is 0.0083
- It is 0.0113 (correct)
- It is 0.0123
- It is 0.0093
What is the actual forward exchange rate for the US dollar after three months?
What is the actual forward exchange rate for the US dollar after three months?
- It remains unchanged from the spot exchange rate
- It reflects the spot exchange rate and the interest rate differentials (correct)
- It reflects only the spot exchange rate
- It reflects only the interest rate differentials
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