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The one-year forward rate of the British pound is quoted at $1.60, and the spot rate of the British pound is quoted at $1.63. Is the forward rate at a discount or a premium, and by what percentage

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abiolataiwo2015

Answer:

discount; 1.8%

Explanation:

Calculation for the forward rate using this formula

forward rate=(F/S) - 1

Let plug in the formula

forward rate= ($1.60/$1.63) - 1

forward rate= -1.8 percent.

Therefore The forward DISCOUNT is 1.8 percent.

The forward rate at a discount or a premium:

Formula :

Forward rate=(F/S) - 1

  •  Forward rate= ($1.60/$1.63) - 1
  • Forward rate= -1.8 percent.

Therefore, the forward discount is 1.8 percent.

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https://brainly.com/question/20630008?referrer=searchResults

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