1. The spot rate is $1.40/pound, the 2-year forward exchange rate is $1.50/pound, and your personal forecast is that the spot rate will be $1.35/pound two years from today.

   1. The euro is at a forward premium of 7.14%

   2. The dollar is at a forward discount of -3.33%

   3. The euro is at a forward discount of -1.79%

   4. The dollar is a forward premium of 3.70%