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The (positive or negative) premium indicates that the pound is selling forward at a (DISCOUNT/PREMIUM) to the dollar, and and simultaneously, the dollar is selling
The (positive or negative) premium indicates that the pound is selling forward at a (DISCOUNT/PREMIUM) to the dollar, and and simultaneously, the dollar is selling (backward/forward) at a (DISCOUNT/PREMIUM) to the pound. That is, the forward rate requires fewer U.S. dollars in exchange for pounds than the current spot rate.
Forward Premium on the Dollar. Calculate the forward premium on the dollar if the spot rate is $1.6138=1.00 and the 3month forward rate is $1.5648=1.00. Note: Use a 360-day year. The forward premium on the dollar is \%. (Round to four decimal places.)Step by Step Solution
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