You Checked the €/$ Exchange Rate Today and You Found

question 85

Multiple Choice

You checked the €/$ exchange rate today and you found that one Dollar cost you €0.8214.When you checked the three months (90 day) €/$ forward exchange rate one dollar was trading at €0.8026.What is the annualized forward premium (discount) for the dollar?

• A) 2.29%
• B) -2.29%
• C) 9.16%
• D) -9.16%

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Definitions:

Indemnity

A contractual obligation of one party to compensate for the loss or damage suffered by another.

Writing Requirements

Legal stipulations that certain contracts or agreements must be written and signed to be legally binding.

Conditional Sale Contract

An agreement for the sale of goods where the purchase price is paid in instalments and the title of the goods remains with the seller until the full purchase price is paid by the buyer.

Security Agreement

A legal contract that grants a lender a security interest in an asset, which acts as collateral for a loan, should the borrower default.