Answer: USD 1.2247 per EUR 1

## Explanation To enter into a long 6-month forward contract, we need to find the 6-month forward ask price. The calculation involves two steps: **Step 1: Calculate the spot ask price** - We know the 1-month forward ask is USD 1.2208 per EUR 1 - 1-month points are 6.0 (which equals 0.0006 in decimal) - Spot ask = 1-month forward ask - 1-month points - Spot ask = 1.2208 - 0.0006 = 1.2202 **Step 2: Calculate the 6-month forward ask price** - 6-month points are 45.0 (which equals 0.0045 in decimal) - 6-month forward ask = Spot ask + 6-month points - 6-month forward ask = 1.2202 + 0.0045 = 1.2247 **Why other options are incorrect:** - **A (USD 1.2155)**: This is the 6-month forward bid price (spot bid - 6-month points = 1.2200 - 0.0045) - **B (USD 1.2245)**: This incorrectly uses spot bid instead of spot ask (spot bid + 6-month points = 1.2200 + 0.0045) - **D (USD 1.2253)**: This incorrectly uses 1-month forward ask instead of spot ask (1.2208 + 0.0045 = 1.2253) The key insight is that for a long forward position, we need the ask price, and we must derive the spot ask from the available forward data before calculating the 6-month forward ask.

Author: LeetQuiz .