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Bank of American (BOA) quotes the following rates for the US dollar Bid (SF/$) Ask (SF/$) Spot rate 0.9886 0.9889 1-month forward 0.9905 0.9908 3-month
Bank of American (BOA) quotes the following rates for the US dollar
Bid (SF/$) Ask (SF/$)
Spot rate 0.9886 0.9889
1-month forward 0.9905 0.9908
3-month forward 0.9951 0.9953
6-month forward 1.0014 1.0016
12-month forward 1.0151 1.0157
Based on the bid quote, is the dollar selling at a 3-month forward premium or a forward discount? Calculate annualized forward premium or discount for 3-month forward quote.
A) 0.0201% forward premium
B) 2.63% forward premium
C) 1.858% forward premium
D) 0.657% forward premium
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