Course Solutions Uncategorized (Answered) : 1. Discuss the following aspects in detail and illustrate your example. a. Premium vs. discounted exchange rates

(Answered) : 1. Discuss the following aspects in detail and illustrate your example. a. Premium vs. discounted exchange rates

1. Discuss the following aspects in detail and illustrate your example.

a. Premium vs. discounted exchange rates

Expert Answer


All kind of forward currency exchange rates often differ in the aspect of it being premium or discount. This totally depends on the spot exchange rate In the case the forward exchange rate for a currency is more than the spot rate, then that is considered as a premium on that currency. At the same time discount exists or follows when the forward exchange rate has offered lower than the spot rate. In a nute shell a negative premium is

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