If the Spot Rate of the Israeli Shekel Is 5

question 22

Multiple Choice

If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ____ to the spot rate.

• A) premium of 8%
• B) premium of 18%
• C) discount of 18%
• D) discount of 8%
• E) premium of 16%

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Definitions:

Potential Losses

Possible negative outcomes or detriments that could occur as a result of specific actions, decisions, or events.

Choices

The act of selecting between two or more possibilities, reflecting personal preference, values, or circumstances.

Availability Heuristic

The tendency to judge the probability of a type of event by how easy it is to think of examples or instances.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1.