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01-09-2020
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Suppose the exchange rate for the swiss franc is quoted as SF 1.10 in the spot market and SF 1.13 in the 90-day forward market. Does the financial market expect the franc to strengthen or weaken relative to the dollar?

Respuesta :

andromache andromache

03-09-2020

Answer:

The franc is expected to depreciate relative to the dollar, because it will take more francs to buy one dollar in the future than it does today.

Explanation:

Here it is mentioned that

Swiss Franc is quoted SF 1.10 in the spot market

SF 1.13 in 90 days forward market

Based on the above information

Here the franc approximate that it would be depreciation with respect to the dollar as it considered more francs to purchased in near future as compared with today

Therefore the same is to be considered

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