Assume you executed a day forward contract to exchange

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Reference no: EM1332487

Question about forward premium

The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($/SF)

Spot $0.8202
30 day forward $0.8244
90 day forward $0.8295
180 day forward $0.8343

a) Was the Swiss franc selling at a discount or premium in the forward market?

b) What was the 30-day forward premium (or discount)?

c) What was the 90-day forward premium (or discount)?

d) Suppose you executed a 90-day forward contract to exchange 100,000 Swiss francs into US dollars. How many dollars would you get 90 days hence?

e) Assume a Swiss bank entered into a 180-day forward contract with Bank of America to buy 4100,000. How many francs will the Swiss bank deliver in six months to get the US dollars?

Reference no: EM1332487

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