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If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ____ to the spot rate. a. premium of 16% b. premium of 8% c. discount of 8% d. premium of 18%

Answer :

Answer:

discount of 8%

Explanation:

= (Forward rate - Spot rate)/Spot rate

= (5.97-5.51)/5.51

= 0.08345

= 8%

As one can obtain more Israeli shekels for a dollar in

the forward market, the forward currency is selling at a discount to the spot

rate.

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