If we are calculating fwd premium/ discount on Sfr relative to Dollar, shouldnt base currency be sfr i.e S0= 0.6261-.6266 & F= .6264-.6277 premium = .0003/0.6264=.047% annualized=.047*12/3=.188% But the answer takes dollar as base currency… In the prev example 18. they have taken pound as base currency. which one is the right one…
The units of exchange rate is Dollars/SFr , i.e. the spot is 0.6261 Dollars per SFr. and the Fwd is 0.6264 Dollars Per SFr. The Forward is simply ( 1 - 0.6261/0.6264) = 0.0003/0.6264. The premium or discount is a percentage ,i.e. unitless. It would be a close match if it was the other way around i.e. SFr/Dollars . Except premium would be discount and vice versa. But it would be still unitless
I don’t think it is unitless The % change would differ if the base currency is different. If you see EOC 4- the % change of baht in terms of dollar is -16.7 & % change in dollar wrt baht is 20 %