Suppose the exchange rate for the Swiss franc is quoted as SF 1.09 in the spot market

Question:

Suppose the exchange rate for the Swiss franc is quoted as SF 1.09 in the spot market and SF 1.11 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?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...

Fantastic news! We've Found the answer you've been seeking!