Assume That the One-Month Forward Rate Is 2

question 24

Multiple Choice

Assume that the one-month forward rate is 2.02 dollars per pound and the spot rate is 2.00 dollars per pound.Calculate the annualized percentage forward premium or discount for the pound.

• A) 12 percent discount
• B) 12 percent premium
• C) 144 percent discount
• D) 144 percent premium

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Definitions:

Automatic Dissolve

A process by which a company or partnership ends its existence without formal action or legal proceedings due to predetermined conditions being met.

Transfer to Heirs

The process by which ownership of property or assets is legally passed from a deceased person to their designated inheritors or next of kin.

Metro Delivery

A service focused on the fast and efficient transportation of goods within metropolitan or urban areas.

Franchise Arrangement

A legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business.