The franc is said to be selling at a _______ if the spot dollar price is $0.48 and the nine-month forward rate is $0.42 ?
Correct answer: A. forward discount
- A. forward discount
- B. forward premium
- C. forward spread
- D. None of these
Explanation
A franc priced at $0.42 in the forward market versus $0.48 in the spot market has a lower future dollar price. Therefore, the franc is selling at a forward discount.
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