If speculators expect the spot rate of the Euro in 30 days to be ____ than...
If speculators expect the spot rate of the Euro in 30 days to be ____ than the 30-day forward rate on Euros, they will ____ Euro forward and put ____ pressure on the Euro forward rate.
- 1. lower; sell; upward
- 2. lower; sell; downward
- 3. higher; sell; upward
- 4.higher; sell; downward
Homework Answers
please find below the solution..
correct answer is option : 2 Lower, Sell , Downward
If speculators expect the spot rate of the Euro in 30 days to be __Lower__ than the 30-day forward rate on Euros, they will _sell___ Euro forward and put _downward___ pressure on the Euro forward rate.
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If speculators expect the spot rate of the Euro in 30 days to be
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bid-ask rates for the U.S. dollar/euro
(US$/euro€)
from December
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b. What is the annual forward premium for all maturities?
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Ask Rate
spot
1.32311.3231
1.32321.3232
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1.32301.3230
1.32311.3231
2 months
1.32281.3228
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1.32271.3227
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bid-ask rates for the U.S. dollar/euro
(US$/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
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1 month
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2 months
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