4. Trading in foreign exchange What are spot rates and forward rates? Loud Sound Recordings Inc., 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 Loud Sound Recordings Inc. The spot exchange rate is 129.20 per dollar, and the 60-day forward rate is 134.56 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 Loud Sound Recordings Inc. the 675 million today, how much will Loud Sound Recordings Inc. receive in dollars? $6.00 million $6.26 million $5.22 million $5.74 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, Loud Sound Recordings Inc. would get more dollars if the Japanese firm paid off its account