The spot and 30-day forward rates for the Swiss franc are $0.9075 and $0.9120 respectively. The...

Question

Question

The spot and 30-day forward rates for the Swiss franc are $0.9075 and $0.9120

respectively. The Swiss franc is said to be selling at an annualized forward ______

Answer 1

Answer #1

Swiss francs are buying more dollars forward

Hence, Swiss francs are selling at a premium in forward market

Annualized premium = [(0.9120-0.9075)/0.9075]*365/30

= 6.033%

Answer 2

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