CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Currency A is currently selling at $0.123 and 180-day forward A's are priced at $0.128. Which of the following is true?
A. A is at a forward premium of 2.0%.
B. A is at a forward discount of 7.81%.
C. A is at a forward premium of 8.13%.
Explanation: If the current rate (spot) is less than the forward rate, there is a forward premium, in this case of ((.128 - .123)/.123)(360/180) = 8.13%.

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