The Spot Exchange Rate is OMR 0.385030 = 1 USD and 90 days forward rate is OMR 0.394030 = 1USD (Home Currency is OMR, which is given as Direct quotes). Does the OMR is trading at premium or discount in 90 days forward market?
The Spot Exchange Rate is OMR 0.385030 = 1 USD and 90 days forward rate is OMR 0.394030 = 1USD (Home Currency is OMR, which is given as Direct quotes). Does the OMR is trading at premium or discount in 90 days forward market?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
The Spot Exchange Rate is OMR 0.385030 = 1 USD and 90 days forward rate is OMR 0.394030 = 1USD (Home Currency is OMR, which is given as Direct quotes). Does the OMR is trading at premium or discount in 90 days forward market?
Expert Solution
Step 1
Based on the above spot and future rates, it can be seen that the USD is trading at a premium.
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