The current spot exchange rate is 150 and the three

69) The current spot exchange rate is $1.50/€ and the three-month forward rate is $1.55/€. Based on your
analysis of the exchange rate, you are confident that the spot exchange rate will be $1.62/€ in three
months. Assume that you would like to buy or sell €1,000,000. What actions do you need to take to
speculate in the forward market? What is the expected dollar profit from speculation?
a. Sell €1,000,000 forward for $1.50/€.
b. Buy €1,000,000 forward for $1.55/€.
c. Wait three months, if your forecast is correct buy €1,000,000 at $1.62/€.
d. Buy €1,000,000 today at $1.50/€; wait three months, if your forecast is correct sell €1,000,000 at
$1.62/€.
70) When a currency trades at a premium in the forward market
71) When a currency trades at a discount in the forward market

72) The SF/$ spot exchange rate is SF1.25/$ and the 180 day forward exchange rate is SF1.30/$. The forward
premium (discount) is
73) The €/$ spot exchange rate is $1.50/€ and the 120 day forward exchange rate is 1.45/€. The forward
premium (discount) is
a. the dollar is trading at an 8% premium to the euro for delivery in 120 days.
b. the dollar is trading at a 5% premium to the Swiss franc for delivery in 120 days.
c. the dollar is trading at a 10% discount to the euro for delivery in 120 days.
d. the dollar is trading at a 5% discount to the euro for delivery in 120 days.
74) The €/$ spot exchange rate is $1.50/€ and the 90-day forward premium is 10 percent. Find the 90-day
forward price.
75) The SF/$ spot exchange rate is SF1.25/$ and the 180 day forward premium is 8 percent. What is the
outright 180 day forward exchange rate?
76) The SF/$ 180-day forward exchange rate is SF1.30/$ and the 180 day forward premium is 8 percent.
What is the outright spot exchange rate?