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iii. Suppose, on Monday 9th March 2020 the USD was worth $1.90/£. The three-month forward rate...

iii. Suppose, on Monday 9th March 2020 the USD was worth $1.90/£. The three-month forward rate for the USD is $1.95/£. Calculate the USD forward premium or discount in percentage terms. Explain what these quotes indicate for the future value of the USD and the British pound.

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Answer #1
Today Dolloar per pound 1.9000
3Month later Dolloar per pound 1.9500

Pound per dollor=1/dollor per pound

Quotes indicate that the future value of dollor is decreasing against pound and that of pound is increasing against dollor.

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