90-day forward rate for the euro is $1.07, while the current spot rate of the euro is $1.05. What is the annualized forward premium or

7.6%

Explanation:

Calculation for What is the annualized forward premium or discount of the euro

Using this formula

Euro annualized forward premium or discount = [(F/S) - 1] x 360 days/90 days

Where,

F represent forward rate $1.07

S represent current spot rate $1.05

Let plug in the formula

Euro annualized forward premium or discount =[($1.07/$1.05) - 1] x 360 days/90 days

Euro annualized forward premium or discount =($1.019-1)×x 360 days/90 days

Euro annualized forward premium or discount =0.019×360 days/90 days

Euro annualized forward premium or discount =0.076×100

Euro annualized forward premium or discount = 7.6 %

Therefore the annualized forward premium or discount of the euro will be 7.6%