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Answer: Price is quoted in forward points.
## Explanation In a foreign exchange (FX) swap, the **price is quoted in forward points**. **FX Swap Structure:** 1. **Initial exchange**: Counterparties exchange principal amounts at the spot rate 2. **Final exchange**: Counterparties re-exchange the same principal amounts at a predetermined forward rate 3. **Pricing**: The forward rate is expressed as spot rate plus/minus forward points **Why other options are incorrect:** - **B**: FX swaps are typically short-term (less than one year), unlike cross-currency swaps which are longer-term - **C**: Currencies are swapped back at the forward rate, not the original spot rate - **D**: FX swaps don't involve periodic interest payments; the interest differential is embedded in the forward points
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Q-79. In a foreign exchange (FX) swap, the:
A
Price is quoted in forward points.
B
Term is typically more than one year.
C
Counterparties swap currencies back at the end of the contract at the original spot rate.
D
Counterparties exchange net interest payments based on the reference rate during the term of the swap.
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