Consider the Following Spot and Forward Rate Quotations for the Swiss

question 13

Multiple Choice

Consider the following spot and forward rate quotations for the Swiss franc. S($/SFr) = 0.85
F₁($/SFr) = 0.86
F₂($/SFr) = 0.87
F₃($/SFr) =0.88
Calculate the 3-month forward premium in American terms.Assume 30-360 pricing convention.

• A)0.353.
• B)0.4235.
• C)0.1364.
• D)0.1412.

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Definitions:

Absolute Advantage

A monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item.