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25 March, 00:24

The sf/$ 180-day forward exchange rate is sf1.30/$ and the 180 day forward premium is 8 percent. what is the outright spot exchange rate?

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Answers (2)
  1. 25 March, 02:02
    0
    The answer is 1.30sf.

    Refer below for the explanation.

    Explanation:

    As per the question,

    Spot rate = 1.30sf

    Forward rate = spot rate*1.08.

    Spot rate = 1.30/1.08

    Spot rate = 1.203.
  2. 25 March, 04:08
    0
    Answer: spot exchange rate = 1.30sf

    Explanation:

    180 day forward exchange rate = sf180 / $ or $1 = 1.30sf

    180 day premium rate = 8%

    forward exchange rate = spot exchange rate x 1.08

    Forward exchange rate is the exchange rate 180 days from now. We know that the forward exchange rate is calculated by taking the spot exchange rate and 8% of the spot exchange rate. This tell us that forward exchange rate of 1.30sf is equal to spot exchange rate multiplied by 1.08 (which is 1 plus 0.08). We then solve for spot exchange rate by dividing 1.30sf with 1.08 to get the spot exchange rate

    1.30sf = Spot exchange rate x 1.08

    spot exchange rate = 1.30sf/1.08

    spot exchange rate = 1.203703704

    spot exchange rate = 1.204sf
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