Suppose it is January 1, 1998 and spot pounds are selling at $1.7342, while 90day forward pounds
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Question:
Suppose it is January 1, 1998 and spot pounds are selling at $1.7342, while 90day forward pounds are selling at $1.7156. At the same time, DM spot and 90day forward rates are $0.6138 and $0.6014, respectively. According to these quotes the
a)pound is selling at a 3.87% forward discount relative to the DM
b)pound is selling at a 2.37% forward premium relative to the DM
c)DM is selling at a 0.97% forward discount relative to the pound
d)DM is selling at a 1.54% forward premium relative to the pound
please provides the steps of solving this question.
the answer is A
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