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one-year forward rate of the British pound is quoted at $1.60, and the spot rate of the British pound is quoted at $1.63. Is the forward
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one-year forward rate of the British pound is quoted at $1.60, and the spot rate of the British pound is quoted at $1.63. Is the forward

User Gabe Levi
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1 Answer

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2 votes

Answer:

the forward discount is 1.84%

Step-by-step explanation:

The computation is shown below:

As we can see that the spot rate is more than the forward rate so it is a forward discount

So the forward discount is

= (Spot rate - forward rate) ÷ (spot rate)

= ($1.63 - $1.60) ÷ $1.63

= 1.84%

Hence, the forward discount is 1.84%

User Rijul Gupta
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