Asked by
Reyna Mejia
on Nov 07, 2024
Verified
According to The National Post, the spot exchange rate for the Euro is Euro 1 = $0.63. The six-month forward exchange rate is Euro 1 = $0.67. Based on these quotes, the Euro is selling at a premium relative to the dollar, and the dollar is selling at a discount relative to the Euro.
Spot Exchange Rate
The current exchange rate at which one currency can be exchanged for another.
Forward Exchange Rate
An agreed-upon exchange rate for currencies to be exchanged at a future date, used in hedging and trading strategies.
Premium
An amount paid for an insurance policy or the amount by which the price of a bond exceeds its face value.
- Comprehend the principles of spot and forward exchange rates, including the concepts of premium and discount in the context of currency exchange.
Verified Answer
TM
Learning Objectives
- Comprehend the principles of spot and forward exchange rates, including the concepts of premium and discount in the context of currency exchange.