Consider the Following Spot and Forward Rate Quotations for the Swiss

question 28

Multiple Choice

Consider the following spot and forward rate quotations for the Swiss franc? $$\begin{aligned}S ( \$ / S F r ) & = 0.85 \\F _ { 1 } ( \$ / S F r ) & = 0.86 \\F _ { 2 } ( \$ / S F r ) & = 0.87 \\F _ { 3 } ( \$ / S F r ) & = 0.88\end{aligned}$$ Which of the following is true:

• A)The Swiss franc is definitely going to be worth more dollars in six months.
• B)The Swiss franc is probably going to be worth less in dollars in six months.
• C)The Swiss franc is trading at a forward discount.
• D)The Swiss franc is trading at a forward premium.

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