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USD/INR spot is 83.50; 3-month forward is 84.00. The annualised forward premium on USD is closest to:
A0.60%
B1.20%
C4.80%
D2.40%
Answer & Solution
Correct answer: D. 2.40%
1. Identify what the question asks: this concept maps to forwardpremium (§12.1).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (D).
_Source: ICAI BoS CA Final Paper 2, Ch 10 "Foreign Exchange Exposure and Risk Management"_
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