Sweet Dog Manufacturing, a U.S. company, produces and exports industrial machinery overseas. It recently made a sale to a Japanese manufacturing firm for 658 million, but the Japanese firm has 60 days before it must make the payment to Sweet Dog Manufacturing The spot exchange rate is 130.11 per dollar, and the 60-day forward rate is 133.78 per dollar. Is the yen selling at a premium or at a discount in the forward market relative to the U.S. dollar?

In the forward market, the yen is trading at a premium.

The yen is trading at a discount in the forward market.

If the customer pays Sweet Dog Manufacturing the 658 million today, how much will Sweet Dog Manufacturing receive in dollars?

$5.06 million

$4.30 million

$5.31 million

$5.82 million

Assuming that the forward market is correct and the spot exchange rate in 60 days will equal the 60-day forward exchange rate today, Sweet Dog Manufacturing would get more dollars if the Japanese firm paid off its account (today or in 60 days) .