Question

The current five year euro yen rate is 6% per annum (compounded annually). the five year eurodollar rate is 8.5%. what is the implied forward premium or discount of the yen (over the current spot rate) for a five year forward contract?

Answer 1

The implied forward premium or discount of the yen (over the current spot rate) for a five year forward contract would be 12.36 percent premium.