The Wall Street Journal reported the following spot and forward rates for the Swiss franc:
|
Spot |
$0.7876 |
|
30-day forward |
$0.7918 |
|
90-day forward |
$0.7968 |
|
180-day forward |
$0.8039 |
a. Was the Swiss franc selling at a discount or a 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 U.S. dollars. How many dollars would you get 90 days hence?
e. Assume a Swiss bank entered into a 180-day forward contract with Citicorp to buy $100,000. How many francs will the Swiss bank deliver in six months to get the U.S. dollars?