Question

If the one-year forward rate for the euro is $1.07, while the current spot rate is $1.05, the expected percentage change in the euro is ____ percent.

Answer 1

1.90%

Step-by-step explanation:

the current value of the euro is $1.05 per euro (spot rate)

the future value of the euro is $1.07 per euro (forward rate)

the expected percent change = [(future value - current value) / current value] x 100 = [($1.07 - $1.05) / $1.05] x 100 = ($0.02 / $1.05) x 100 = 1.9047% ≈ 1.9%

Answer 2

percentage change = 1.90%

Step-by-step explanation:

Their is a decrease in the rate . The one year forward rate is $1.07 . This means the original number is $1.07. The current spot rate is $1.05 and this means the new number is $1.05.

Decrease = Original - New

Decrease = $1.07 - $1.05 = $0.02.

percentage change = Decrease/original × 100

percentage change = 0.02/1.07 × 100

percentage change = 2/1.07

percentage change = 1.8691588785

percentage change = 1.90%