
Explanation:
When we divide the forward points of -5.6 by 10,000, we get -0.00056. The next step is to add this to our spot rate of 1.6459, which will lead us to a result of 1.64534.
Q-3831: Using the table of maturity and forward points or spot rate below, what is the three-month forward rate given that the spot exchange rate is 1.6459?
| Maturity | Spot rate or forward points |
|---|---|
| One week | –0.2 |
| One month | –1.0 |
| Three months | –5.6 |
| Six months | –12.7 |
| Twelve months | –25.3 |
A
1.64534
B
1.45677
C
1.63546
D
1.65342
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