
Explanation:
C is correct. To enter into a long 6-month forward contract, we need to find the 6-month forward ask price. The first step is to calculate the spot-ask from the provided information.
Spot ask = 1-month forward ask - 1-month points / 10,000 = $1.2208 - 6.0 / 10,000 = 1.2202$
Then add the 6-month ask points to the spot-ask found in the prior step: 6-months forward ask = $1.2202 + 45.0 / 10,000 = 1.2247$
A is incorrect: 6-months forward bid is $1.2200 - 45.0 / 10,000 = 1.2155$
B is incorrect: If instead of spot ask use bid, 6-months forward ask is $1.2200 + 45.0 / 10,000 = 1.2245$
D is incorrect: If instead of spot ask use 1-month forward ask, 6-months forward ask is $1.2208 + 45.5 / 10,000 = 1.2253$
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Q-69. An FX trader wants to enter into a 6-month EUR/USD forward contract and gathers the following information:
How much will it cost to enter into a long 6-month forward contract?
A
USD 1.2155 per EUR 1
B
USD 1.2245 per EUR 1
C
USD 1.2247 per EUR 1
D
USD 1.2253 per EUR 1
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