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    Forward discount or premium

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    Forward Premium: Compute the forward discount or Premium for the Mexican peso whose 90-day forward rate is $ .102 and spot rate is $ .10. State whether your answer is a discount or premium.
    Thank you.
    The reference textbook is International Financial Management by Jeff Madura, 10th edition.

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    The premium of discount is the difference between the forward rate and the spot rate. If the forward rate is higher, implying we get more $ for 1 peso this would imply a premium since we ...

    Solution Summary

    The solution explains how to calculate the forward discount or premium