On the other hand, using a forward exchange rate, it is possible to acquire the lock-in price of

£322,217. This plainly suggests that the euro is selling at a premium to the British pound (i.e., it
was trading at a price larger than £320,000).

As a result, we may estimate that Mr. Lim will receive £2,217 (£322,217-£320,000).

Shrewsbury would end up

locking-in an amount less than
the amount of £320,000 if
the euro was trading at a
forward discount. Only if the
forward exchange rate is even
with the
spot rate will Shrewsbury
receive exactly £320,000.
Shrewsbury would end up
locking-in an amount less than
the amount of £320,000 if
the euro was trading at a
forward discount. Only if the
forward exchange rate is even
with the
spot rate will Shrewsbury
receive exactly £320,000.
If the euro was trading at a forward discount, Lim would wind up locking in a lower sum than
£320,000. Lim, will only receive exactly £320,000 if the forward exchange rate is equal to the
spot rate.