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Suppose you observe the spot price and forward price for Mexican peso (MXP) to US dollar (USD) exchange rate as follows: Spot price $0.100 12-month

Suppose you observe the spot price and forward price for Mexican peso (MXP) to US dollar (USD) exchange rate as follows: Spot price $0.100 12-month forward $0.107 3-month forward $0.102

Compute the forward discount or premium for the 12-month MXP forward rate and 3-month MXP forward rate, respectively. State clearly whether it is a discount or premium.

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