Foward Quote Problem

Use the exchange rates in the table to answer the questions.

	American Term	European Term
Swiss Franc	0.9036	1.1067
1-month forward	0.9052	1.1047
3-month forward	0.9077	1.1017

(a) Is Swiss Franc trading at premium or discount vs. USD in the forward market?

(b) Calculate the 1-month forward premium/discount using European Term (30 days).

(c) Suppose you long a 3-month forward contract on Swiss Franc, worth SF 1,000,000 at the above forward rate. At maturity date, you check the spot exchange rate, S(USD/SF) = 0.9125. State your profit/loss in USD from the forward transaction at maturity date.