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Question
Suppose that the 1-year forward rate of dollar per pound is $1.32, the current spot rate ($/pound) is $1.20, and the expected future spot rate ($/pound) is $1.40. The expected premium on the pound is:
a. -6.7%
b. 5.7%
c. 10%
d. 16.7%
Answer
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Related questions
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The equivalence of the exchange rate to the ratio of price levels between two countries is referred to as the:
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Q:
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Q:
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True or false: The BP curve could be vertical, if capital is perfectly mobile.
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Considering the internal balance in an economy, which of the following could lead to lower interest rate and higher income?
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In foreign exchange forecasting, what is a good forecast?
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Q:
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Q:
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Q:
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Q:
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Q:
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:
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Q:
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