If the euro is selling for $1.45 in the spot market and $1.28 in the three-month forward market, which of the following is true?

Multiple Choice

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

• The forward market is out of equilibrium.

• The spot market is out of equilibrium.

• The euro is expected to depreciate in value.

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