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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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An FX trader wants to enter into a 6-month EUR/USD forward contract and gathers the following information:

  • The spot bid is USD 1.2200 per EUR 1
  • 1-month forward ask is USD 1.2208 per EUR 1
  • Points for 1-month, 3-month, 6-month and 1-year maturities are 6.0, 22.5, 45.0 and 97.7, respectively
  • Points are the same for bid and ask across all maturities

How much will it cost to enter into a long 6-month forward contract?

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