For instance if given the following rates for USD/EUR
Spot~~~~~~1.4642 - 1.4662
1 month~~~ 30 - 60
In this case, would the Euro be selling at a forward discount or premium? And why?
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May 15th, 2010 at 6:46 am
This formula might help,
[(Forward rate - spot rate)/Spot rate)] *(12/no of forward months)*100
Premium if postive , Discount if negative