The forward market than in the spot market

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Reference no: EM131616275

1. What will a currency trade at when a currency is worth less in the forward market than in the spot market?

At a discount

At a premium

At par

At spot

2. Sears and Roebuck decide that theywould like to offer their long-standing customers the option of paying electronically at the time of purchase, rather than the current terms of paying by check on Day 45. Assuming an average cost of capital of 15%, what discount should Sears offer in order make the terms float neutral? a. 0.91% b. 1.25% c. 1.62% d. 1.82%

Reference no: EM131616275

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