The annualized forward rate premium

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Reference no: EM132004379

1. Assume that the spot rate of the New Zealand dollar is $. 60 while the 90 day forward rate is $. 58. The annualized forward rate premium (or discount) is:

A. 13.79% premium

B. 13.79% discount

C. 13.33% discount

D. 13.33% premium

E. None of the above

2. Assume that the spot rate of the euro is $1.05, the one year US interest rate is 8 % and the one year European interest rate is 10%. Under condit 8 of interest rate parity, the forward premium (or discount) of the euro will be:

A. 1.82% premium

B. 1.86% premium

C. 1.82% discount

D. 1.86% discount

E. None of these are correct

Reference no: EM132004379

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