Forward Premium on the Dollar. Calculate the forward premium on the dollar if the spot rate is $1.6138=£1.00 and the 3-month forward rate is $1.5648=£1.00. Note: Use a 360-day year.
A: The forward premium on the dollar is ___% (Round to FOUR decimal places.)
B: The (positive or negative) premium indicates that the pound is selling forward at a (DISCOUNT/PREMIUM) to the dollar, and and simultaneously, the dollar is selling (backward/forward) at a (DISCOUNT/PREMIUM) to the pound. That is, the forward rate requires fewer U.S. dollars in exchange for pounds than the current spot rate.