Spot and Forward Rates. Suppose the exchange rate for the Swiss franc is quoted as SF 1.50 in the spot market and SF 1.53 in the 90-day forward market.
a. Is the dollar selling at a premium or a discount relative to the franc?
b. Does the financial market expect the franc to strengthen relative to the dollar? Explain.
c. What do you suspect is true about relative economic conditions in the United States and Switzerland?
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