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Assume that the US dollar is selling in the spot market for AUD1.27. Simultaneously, in the 3-month forward market the US dollar is selling for
Assume that the US dollar is selling in the spot market for AUD1.27. Simultaneously, in the 3-month forward market the US dollar is selling for AUD1.30. Which one of the following statements correctly describes this situation? I. The US dollar is selling at a premium relative to the Australian dollar. II. The Australian dollar is selling at a premium relative to the US dollar. III. The Australian dollar is selling at a discount relative to the US dollar. IV. The US dollar is selling at a discount relative to the Australian dollar. I and II only I and III only II and IV only III and IV only I and IV only
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