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Basic Question 2 of 14
Assume EUR:USD is 1.3146 and the three-month forward points are quoted as 28. The EUR:USD three-month forward rate is ______.
B. 1.3118
C. 1.3174
A. 1.5946
B. 1.3118
C. 1.3174
User Contributed Comments 3
| User | Comment |
|---|---|
| maryprz14 | FX market is a stupid game!!! apparently, no rule applies to it; 28 means .0028. So let's say EUR:USd rate is 1.31460 the would 28 mean 0.00028????? ahhhhhhhhhhhhhhh... I wanna shoot myself |
| timkalt | If you have the 4-digit quotation, you can just add the BP´s to the end. So, in this case 3146+28=3174. Therefore, c is correct. |
| MathLoser | 1.3146 . That's 4dp 28/(10)^4 = 0.0028 1.3146 + 0.0028 = 1.3174 What about 1.314? That's only 3. So 28/(10)^3 = 0.028 ==> 1.314 + 0.028 = 1.342. Go on. |
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Learning Outcome Statements
explain the arbitrage relationship between spot and forward exchange rates and interest rates, calculate a forward rate using points or in percentage terms, and interpret a forward discount or premium
CFA® 2025 Level I Curriculum, Volume 1, Module 8.