Use the following information in answering problems 1 and
The amount of bid using borrowing and lending is equal to the current market rate, while the amount of bid using a forward contract is determined by subtracting the forward rate from the spot rate. For example, if the spot rate for a US dollar/British pound currency pair is 1.18 and the forward rate for that same currency pair is 1.20, then the amount being bid via a Forward Contract would be -0.02 (1.18 – 1.20).
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