The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($/SF):Spot $0.943230-day forward $0.948190-day forward $0.9531180-day forward $0.9594a. Was the Swiss franc selling at a discount or premium in the forward market?b. What was the 30-day forward premium (or discount)?c. What was the 90-day forward premium (or discount)?d. Suppose you executed a 90-day forward contract to exchange 100,000 Swiss francs into U. S. dollars. How many dollars would you get 90 days hence?

The Wall Street Journal Reports

a. The Swiss franc was selling at a premium in the forward market.

b. The 30-day forward premium was: $0.0049.

c. The 90-day forward premium was: $0.0099.

d. Dollars to receive from a 90-day forward contract is $95,310.

Explanation:

a) Data and Calculations:

Spot and forward rates for the Swiss franc ($/SF):

Spot $0.9432

30-day forward $0.9481

90-day forward $0.9531

180-day forward $0.9594

Premium:

30-day forward $0.9481

Spot   $0.9432

Premium =                             $0.0049

90-day forward $0.9531

Spot   $0.9432

Premium =                             $0.0099

180-day forward $0.9594

Spot    $0.9432

Premium =                               $0.0162

Dollars to receive from a 90-day forward contract is $95,310 ($0.9531 * SF 100,000)

answer; yield to maturity;

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