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The one-year forward rate of the British pound is quoted at $1.50, and the spot rate of the British pound is quoted at $1.515. The forward ____ is ____ percent.

Respuesta :

Parrain

Answer: a. discount; 1.0

Explanation:

When the forward rate is higher than the spot rate, the rate is said to be a Premium. When the opposite holds true then the rate is said to be a discount.

Calculating the rate;

= [tex]\frac{1.515-1.5}{1.515}[/tex]

= 0.99

= 1.0

Forward rate is lower so this is a discount.

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