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boland boland
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7 years ago
What was the annualized forward premium on the pound if the spot rate on May 6, 2011 was £0.6102/$ and the 180 day forward rate was £0.5836/$?
A) 18.23%
B) 8.72%
C) 9.12%
D) 4.56%
Textbook 
Fundamentals of Multinational Finance

Fundamentals of Multinational Finance


Edition: 5th
Authors:
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noxx53noxx53
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#1
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7 years ago
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boland Author
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#2
7 years ago
You're amazing, seriously
wrote...
#3
7 years ago
Pleasure is all mine
Anonymous
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#4
10 months ago
Help! The answer is missing an explanation...
Anonymous
wrote...
#5
10 months ago
Here's a similar question and its solution.

Solution:

Annualised forward premium on pound=((1/spot pound per dollar)/(1/forward pound per dollar)-1)*360/forward maturity=((1/0.5)/(1/0.5156)-1)*360/180
=6.24%
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