Assume that the dollar is selling at a premium on the 30-day dollar/euro forward market. Which of the following is true of the foreign exchange dealers' market's expectations about the dollar over the next 30 days?
A. The dollar will depreciate against the euro.
B. The market is undecided about the direction of currency movement.
C. The dollar will appreciate against the euro.
D. The dollar/euro exchange rate will be steady.
E. The dollar will buy more euros with a spot exchange than with a 30-day forward exchange.
Ans: C. The dollar will appreciate against the euro.
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