Forward rate: The three-month forward rate on the Swiss Francs is $1.13310/SF and the spot rate $1.12630/SF.

Question:

Forward rate: The three-month forward rate on the Swiss Francs is $1.13310/SF and the spot rate $1.12630/SF. The three-month forward rate on the Japanese yen is $0.008754/¥ and the spot rate is

$0.008720/¥.

a. Is the Swiss franc selling for a premium or a discount against the U.S. dollar?

b. Is the Japanese yen selling for a premium or a discount against the U.S. dollar?

c. Given the information above, what do you think will happen to the value of the Swiss franc and the Japanese yen relative to the U.S. dollar?

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