4. Trading in foreign exchange What are spot rates and forward rates? Sweet Dog Manufacturing, a U.S. company, produces and exports industrial machinery overseas. It recently made a sale to a Japanese manufacturing firm for 675 million, but the Japanese firm has 60 days before it must make the payment to Sweet Dog Manufacturing The spot exchange rate is 128.75 per dollar, and the 60-day forward rate is 133.45 per dollar. Is the yen selling at a premium or at a discount in the forward market relative to the U.S. dollar? In the forward market, the yen is trading at a premium The yen is trading at a discount in the forward market. If the customer pays Sweet Dog Manufacturing the 675 million today, how much will Sweet Dog Manufacturing receive in dollars? $5.24 million $5.76 million $6.29 million O $4.45 million Assuming that the forward market is correct and the spot exchange rate in 60 days will equal the 60-day forward exchange rate today, Sweet Dog Manufacturing would get more dollars if the Japanese firm paid off its account in 60 days today