The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($ per SF). Spot 30-day forward 90-day forward 180-day forward $ 0.8226 $ 0.8552 $ 0.8564 $ 0.8611 a. Was the Swiss franc selling at a discount or premium in the forward market? Discount Premium b. What was the 30-day forward premium (or discount) percentage? Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. 30-day forward premium/discount % c. What was the 90-day forward premium (or discount) percentage? Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. 90-day forward premium/discount % d. Suppose you executed a 90-day forward contract to exchange 340,000 Swiss francs into U.S. dollars. How many dollars would you get 90 days hence? Dollars for Swiss francs e. Assume a Swiss bank entered into a 180-day forward contract with Bankers Trust to buy $340,000. How many francs will the Swiss bank deliver in six months to get the U.S. dollars? Note: Round your answer to 2 decimal places.
The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($ per SF). Spot 30-day forward 90-day forward 180-day forward $ 0.8226 $ 0.8552 $ 0.8564 $ 0.8611 a. Was the Swiss franc selling at a discount or premium in the forward market? Discount Premium b. What was the 30-day forward premium (or discount) percentage? Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. 30-day forward premium/discount % c. What was the 90-day forward premium (or discount) percentage? Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. 90-day forward premium/discount % d. Suppose you executed a 90-day forward contract to exchange 340,000 Swiss francs into U.S. dollars. How many dollars would you get 90 days hence? Dollars for Swiss francs e. Assume a Swiss bank entered into a 180-day forward contract with Bankers Trust to buy $340,000. How many francs will the Swiss bank deliver in six months to get the U.S. dollars? Note: Round your answer to 2 decimal places.
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 40QA
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