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yaroslaw [1]
3 years ago
12

If the spot rate of the Israeli shekel is 5.76 shekels per dollar and the 180-day forward rate is 5.51 shekels per dollar, then

the forward rate for the Israeli shekel is selling at a _______________ to the spot rate.
Answer choices:

4.34% premium

6.53% discount

7.71% premium

5.35% discount
Business
1 answer:
kvv77 [185]3 years ago
8 0

Answer:

Premium = $5.76 -$5.51 = 0.25

Percentage of premium = 0.25/5.76 x 100

                                        = 4.34% premium

The correct answer is A

Explanation:

This is an indirect quote in which dollar is fixed and shekels is variable. In order to obtain the 180-day forward rate, premium of $0.25 has been deducted. In indirect quote, premium is deducted from the spot rate in order to determine the forward rate ie $5.76 - $0.25 = $5.51. The percentage of premium is calculated as premium divided by spot rate multiplied by 100.

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