What is the forward premium on the dollar

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1. Suppose the Eurosterling rate is 15% and the Eurodollar rate is 11.5%. What is the forward premium on the dollar? Explain.

2. Suppose the spot rates for the euro, pound sterling, and Swiss franc are $1.52, $2.01, and $0.98, respectively. The associated 90-day interest rates (annualized) are 8%, 16%, and 4%; the U.S. 90-day rate (annualized) is 12%. What is the 90-day forward rate on an ACU (ACU 1 = €1 + £1 + SFr 1) if interest parity holds?

Reference no: EM131278480

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