A currency forward contract is an agreement between two ... etc.). The formula is as follows: Annualized Forward Premium = [(Forward Rate - Spot Rate) ÷ Spot Rate] × (360 ÷ n) × 100% Here ...
The one year forward rate represents the one-year interest rate one year from now. You would solve the formula (1.04)^2=(1.02)(1+F1). F is 6.03%. Now calculate the two-year forward rate one year ...
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