The 90-Day Forward Rate for the Euro Is $1

question 44

Multiple Choice

The 90-day forward rate for the euro is $1.07, while the current spot rate of the euro is $1.05. What is the annualized forward premium or discount of the euro?

• A) 1.9 percent discount.
• B) 1.9 percent premium.
• C) 7.6 percent premium.
• D) 7.6 percent discount.

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Definitions:

Firm's Profit

The financial gain achieved by a firm when its total revenues exceed its total expenses.

Profitable Output

The level of production at which a business or entity maximizes its profit, considering its cost structure and market demand.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services to make a profit.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing the additional gain beyond the normal profit level.