Suppose the exchange rate for the Swiss Franc is quoted as SF 1.10 in the spot...
Suppose the exchange rate for the Swiss Franc is quoted as SF 1.10 in the spot market and SF 1.15 in the 90-day forward market. Does the financial market expect the franc to strengthen or weaken relative to the dollar?
Homework Answers
financial market expect the swiss Franc to weaken relative to the dollar.
because spot rate is SF 1.10 per dollar
and in the forward market it is SF 1.15 per Dollar, the exchange rate per dollar has been increased
the Dollar will strengthen in foraward market because we have to give more Swiss Franc to buy dollar in forward market
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