Answer:
7.6 percent
Explanation:
The forward rate for the euro is $1.07
The current spot rate for the euro is $1.05
Therefore the annualized forward premium or discount of the euro can be calculated as follows
= forward rate/Current spot rate - 1 × 360/90
= $1.07/$1.05-1 × 360/90
= 1.0190-1×4
= 0.0190×4
= 0.076×100
= 7.6 percent
Hence the annualized forward premium or discount of the euro is 7.6 percent
