Bid/Ask on Dollar/Euro Forwards. Use the following spot and forward bid-ask rates for the U.S. dollar/euro (US$/€) from December 10, 2010, to answer the following questions: a. What is the mid-rate for each maturity? b. What is the annual forward premium for all maturities? c. Which maturities have the smallest and largest forward premiums? (Click on the D icon to import the table into a spreadsheet.) Period Bid Rate Ask Rate spot 1.3257 1.3258 1 month 1.3255 1.3256 2 months 1.3254 1.3255 3 months 1.3249 1.3251 6 months 1.3240 1.3242 12 months 1.3221 1.3225 T.VE TL 12 months 360 1.3221 1.3225 1.32230 24 months 720 1.3178 1.3207 1.31925 b. What is the annual forward premium for all maturities? Calculate the annual forward premium for all maturities below: (Round to four decimal places.) Days Bid Rate Ask Rate Forward Period Forward US$I€ US$/€ Premium Spot 1.3257 1.3258 1 month 30 1.3255 1.3256 | %

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