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can anyone remind me what how premium on the exchange rates is treated? pls heeeelllppppppp!!!! fro quick reference pls refer to Little PLC Question 14 (b) in the open tuition practise questions.
Hi,
When forward rate is quoted as an adjustment to the spot rate:
1. substract the premium;
2. add a discounteg. $/£
Spot: 1.9612 – 1.9618
3 M forward: 0.0012 – 0.0006 premium => 3 M forward 1,9600 – 1,9612
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