Answer:
discount , 10.81%
Explanation:
Given : Spot Rate of the currency = $0.37
90 day Forward Rate = $0.36
A premium or a discount on a currency is given by the following equation:
= [tex]\frac{FR\ -\ SR}{SR} * \frac{365\ days}{Forward\ Days} *100[/tex]
wherein, FR = Forward Rate of a currency
SR = Spot Rate of a currency
Forward days= Forward period
In the given case, premium or discount can be calculated, by putting the values in the above equation. We have,
= [tex]\frac{.36\ -\ .37}{.37} * \frac{365\ days}{90 Days} *100[/tex]
= - 10.81 %
the negative sign denotes a forward discount
