Spot vs forward rate
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If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ________________ to the spot rate.
A. premium of 8%
B. premium of 18%
C. discount of 18%
D. discount of 8%
E. premium of 16%
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Solution Summary
The solution explains the relationship between spot rate and forward rate.
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P = Forward Market Premium or Discount Percent =
[( Forward - ...
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