Answer:
7.6%
Explanation:
Calculation for What is the annualized forward premium or discount of the euro
Using this formula
Euro annualized forward premium or discount = [(F/S) - 1] x 360 days/90 days
Where,
F represent forward rate $1.07
S represent current spot rate $1.05
Let plug in the formula
Euro annualized forward premium or discount =[($1.07/$1.05) - 1] x 360 days/90 days
Euro annualized forward premium or discount =($1.019-1)×x 360 days/90 days
Euro annualized forward premium or discount =0.019×360 days/90 days
Euro annualized forward premium or discount =0.076×100
Euro annualized forward premium or discount = 7.6 %
Therefore the annualized forward premium or discount of the euro will be 7.6%
