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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.
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Answer #1

The answer is

  • premium in the forward market

When Forward rate for one currency is higher than the Spot rate, it means currency is trading at a premium in forward market

Discount/Premium is not applicable on Spot Price

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