91Ó°ÊÓ

Spot rate: - Spot rates are those rates that are applicable on buying or selling currencies at the spot (immediately)

Forward rate: - Forward rates are those rates that are applicable on buying or selling currencies at the future specified date.

$\begin{array}{c}\mathrm{Spot}=\mathrm{\$}0.8202\\ 1\mathrm{Swiss}\mathrm{franc}=\mathrm{\$}0.8202\end{array}$

Hence, the Swiss franc is selling at a discount.

Spot rate= $0.8202

30 days forward rate= $0.8244

$\mathbf{Forward}\mathbf{\text{ â¶Ä‰}}\mathbf{premium}\mathbf{/}\mathbf{discount}\mathbf{\text{ â¶Ä‰}}\mathbf{rate}\mathbf{=}\frac{\mathbf{Forward}\mathbf{−}\mathbf{Spot}}{\mathbf{Spot}}\mathbf{×}\frac{\mathbf{12}}{\mathbf{months}}\mathbf{×}\mathbf{100}$

$\begin{array}{l}=\frac{\mathrm{\$}0.8244−\mathrm{\$}0.8202}{\mathrm{\$}0.8202}×\frac{12}{1}×100\\ =\frac{\mathrm{\$}0.0042}{\mathrm{\$}0.8202}×\frac{12}{1}×100\\ =6.14\mathrm{\%}\end{array}$

Spot rate= $0.8202

90 days forward rate= $0.8295

$\mathbf{Forward}\mathbf{}\mathbf{\text{ â¶Ä‰}}\mathbf{premium}\mathbf{/}\mathbf{discount}\mathbf{}\mathbf{\text{ â¶Ä‰}}\mathbf{rate}\mathbf{=}\frac{\mathbf{Forward}\mathbf{−}\mathbf{Spot}}{\mathbf{Spot}}\mathbf{×}\frac{\mathbf{12}}{\mathbf{months}}\mathbf{×}\mathbf{100}$

$\begin{array}{l}=\frac{\mathrm{\$}0.8295−\mathrm{\$}0.8202}{\mathrm{\$}0.8202}×\frac{12}{3}×100\\ =\frac{\mathrm{\$}0.0093}{\mathrm{\$}0.8202}×\frac{12}{3}×100\\ =4.53\mathrm{\%}\end{array}$

90 days forward price= $0.8295

Swiss franc= 100,000

$\begin{array}{c}\mathrm{Dollars}=\mathrm{Swiss}\text{ }\mathrm{franc}×\mathrm{Forward}\text{ }\mathrm{price}\\ =100,000×\mathrm{\$}0.8295\\ =\mathrm{\$}82,950\end{array}$

180 days forward price= $0.8343

U.S. dollars= 100,000

$\begin{array}{l}=\frac{\mathrm{\$}100,000}{\mathrm{\$}0.8343}\\ =119,860\text{ â¶Ä‰}\mathrm{Swiss}\text{ â¶Ä‰}\mathrm{franc}\end{array}$