Assume that the Euro is selling in the spot market for $1.10. Simultaneously, in the 3- month forward market the Euro is selling for $1.12. Which one of the following statements correctly describes this situation?

I. The euro is selling at a premium relative to the dollar.

II. The dollar is selling at a premium relative to the euro.

III. The dollar is selling at a discount relative to the euro.

IV. The euro is selling at a discount relative to the dollar.

I and II only

III and IV only

II and IV only

I and IV only

I and III only