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Basic Question 7 of 14
If the spot rate is $:CNY (Chinese yuan) = 6.3000 and the forward exchange rate is $:CNY = 6.3200, then the ______
B. dollar quotes at a 0.0200 CNY discount.
C. CNY quotes at a 0.0200 CNY premium.
A. dollar quotes at a 0.0200 CNY premium.
B. dollar quotes at a 0.0200 CNY discount.
C. CNY quotes at a 0.0200 CNY premium.
User Contributed Comments 4
| User | Comment |
|---|---|
| schweitzdm | I thought it was C. It seems this section will require nothing more than spamming Qbank and memorizing everything that way. |
| Teeto | you need 6.3 CNY to buy 1 USD today and 6.32 to buy it in the future. So USD becomes more expensive (costs more CNY) - a premium |
| Marinov | I agree with schweitz. A quote USDCNY means that 1 yuan buys 6,3 dollars not the other way round. Of course, we know from general knowledge that it is indeed 1 dollar that buys that 6,3 yuans but the wording is misleading. |
| davidt876 | Marinov the question quotes CNY/USD - not USDCNY.. so what mislead you? Price/Base means the 6.3 is quoted in CNY. The question's fine |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
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.