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The spot rate of the euro is quoted at $1.29. the annualized forward premium on the euro is 10 percent. what is the 30-day forward rate of the euro? a.$1.28 b.$1.30 c.$1.42 d.$1.16

Respuesta :

The 30-day forward rate of the euro is (B) $1.30.

What is a spot rate?

  • The spot rate is the price indicated for an interest rate, commodity, security, or currency for immediate settlement.
  • The spot rate, often known as the "spot price," is the current market value of an asset that is available for immediate delivery at the time the quote is made.
  • The spot rate is obtained by determining the discount rate that equals the present value (PV) of a zero-coupon bond.
  • These are based on assumptions about future interest rates.
  • As a result, spot rates can employ varying interest rates for various years before maturity.

To find the 30-day forward rate of the euro:

Given: The spot rate of the euro is quoted at $1.29.

So, $1.29 × [1+ 0.10/(360/30)] = $1.30

Therefore, the 30-day forward rate of the euro is (B) $1.30.

Know more about spot rates here:

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