ZuoTi.Pro
Question

Calculate the forward discount of the euro against the dollar​ (the dollar is the home​ currency)...

Calculate the forward discount of the euro against the dollar​ (the dollar is the home​ currency) if the spot rate is

$ 1.6257 divided by pound$1.6257/£

and the

66​-month

forward rate is

$ 1.6045 divided by pound$1.6045/£.

​Note: Use a​ 360-day year.

The forward premium on the dollar is

nothing​%

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Spot Eur/Dollar = 1/1.6257 = Eur 0.6151/$

Forward Eur/Dollar = 1/1.6045 = Eur 0.6232/$

Forward premium = [(0.6232-0.6151)/0.6151]*(12/66)*100 = 0.239%

0 0
Add a comment
Know the answer?
Add Answer to:
Calculate the forward discount of the euro against the dollar​ (the dollar is the home​ currency)...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Direct on the Dollar. Calculate the forward discount of the euro against the dollar​ (the dollar...

    Direct on the Dollar. Calculate the forward discount of the euro against the dollar​ (the dollar is the home​ currency) if the spot rate is $ 1.6257 divided by pound and the 6​-month forward rate is $ 1.6045 divided by pound. ​Note: Use a​ 360-day year. The forward premium on the dollar is nothing​%.

  • Calculate the forward premium on the dollar​ (the dollar is the home​ currency) if the spot...

    Calculate the forward premium on the dollar​ (the dollar is the home​ currency) if the spot rate is €1.3300/$ and the 3​-month forward rate is €1.3400/$. ​Note: Use a​ 360-day year. The forward premium on the dollar is _____________%. (Round to four decimal places).

  • Dollar/Euro Forwards. Use the following spot and forward​ bid-ask rates for the U.S.​ dollar/euro ​(US$/euro€​) from...

    Dollar/Euro Forwards. Use the following spot and forward​ bid-ask rates for the U.S.​ dollar/euro ​(US$/euro€​) from December ​10, 2010, to answer the following​ questions: a. What is the​ mid-rate for each​ maturity? b. What is the annual forward premium for all​ maturities? c. Which maturities have the smallest and largest forward​ premiums? Period Bid Rate Ask Rate spot 1.32311.3231 1.32321.3232 1 month 1.32301.3230 1.32311.3231 2 months 1.32281.3228 1.32291.3229 3 months 1.32241.3224 1.32271.3227 6 months 1.32151.3215 1.32181.3218 12 months 1.31941.3194 1.31981.3198...

  • Given that the spot rate is 1.5 euros per pound and the forward euro-pound exchange rate...

    Given that the spot rate is 1.5 euros per pound and the forward euro-pound exchange rate is 1.575 euros per pound calculate the forward premium discDunt on the British pound and indicate which of the two it is. Consider a Dutch investor with 1 000 euros to pace in a bank deposit in either the Netherlands or Great Britain. The one-year interest rate on bank deposits is 2% in Britain and 4.04% in the Netherlands. The one year forward euro-pound...

  • If the forward price is higher than the spot price then the currency is trading at a: Multiple Choice discount in the...

    If the forward price is higher than the spot price then the currency is trading at a: Multiple Choice discount in the spot market. Whether the currency is selling at a premium or a discount in the spot or forward market depends on whether the exchange rate is quoted in American or European terms. premium in the spot market. discount in the forward market. premium in the forward market.

  • Assume the quotes indicated below are from a dealer in the NY currency market. Forward prices...

    Assume the quotes indicated below are from a dealer in the NY currency market. Forward prices are quoted as the absolute forward premium or discount (not percentage) in basis points (one basis point = .0001). Part 1. Forward exchange rates 1a. If the dealer’s spot market quotes for the British pound (£) are 1.3195 1.3200, and the dealer’s 6-month forward quotes for the euro are: -20 -12, what are the dealer’s effective 6-month forward bid and ask prices for the...

  • Assume the quotes indicated below are from a dealer in the NY currency market. Forward prices...

    Assume the quotes indicated below are from a dealer in the NY currency market. Forward prices are quoted as the absolute forward premium or discount (not percentage) in basis points (one basis point = .0001). Part 1. Forward exchange rates 1a. If the dealer’s spot market quotes for the British pound (£) are 1.3195 1.3200, and the dealer’s 6-month forward quotes for the euro are: -20 -12, what are the dealer’s effective 6-month forward bid and ask prices for the...

  • Spot Question 2 Given below are spot and forward rates expressed in US dollars per unit...

    Spot Question 2 Given below are spot and forward rates expressed in US dollars per unit of the Euro and £ Rates 1.5393 1.6030 30 days forward 1.5406 1.6006 60 days forward 1.5425 1.6000 90 days 1.5431 1.5945 180 days 1.5478 1.5859 Required: i. Is the 90-day forward € quoted at a discount or at a premium? ii. Is the 90-day forward contract in pound trading at a discount or at premium? iii. Relative to the pound is the 180...

  • Canadian Dollar: Spot and Forward (C$/$) Euro: Spot and forward ($/€) Mid rates Bid Ask Mid...

    Canadian Dollar: Spot and Forward (C$/$) Euro: Spot and forward ($/€) Mid rates Bid Ask Mid rates Bid Ask spot 1.2645 1.2639 1.2651 1.2390 1.2387 1.2393 Forward 3-week 23 27 19 15 3-month 135 128 155 146 7a. How much $100 will cost you in Canadian Dollar and Euro? (Hint: you are buying USD). 7b. What are 3-week and 3-month forward bid and ask rate for Canadian Dollar and Euro? 7c. Based on information above, what are the profit margin...

  • When a currency trades at a forward discount in the forward market a. the forward rate...

    When a currency trades at a forward discount in the forward market a. the forward rate is less than the spot rate. b. the forward rate is more than the spot rate. c. the forward exchange rate is less than one dollar (e.g. €1.00 = $0.928). d. the exchange rate is less than it was yesterday.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT