Suppose That the 1-Year Forward Rate of Dollar Per Swiss

question 41

Multiple Choice

Suppose that the 1-year forward rate of dollar per Swiss franc is $0.42,the current spot rate $/SFr is $0.40,and the expected future spot rate $/SFr is $0.45.The forward premium equals to:

• A) - 7.5%
• B) 5%
• C) 6.67%
• D) 12.5%