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Basic Question 0 of 5

Assume EUR:USD is 1.3146 and the three-month forward points are quoted as 28. The EUR:USD three-month forward rate is ______.

A. 1.5946
B. 1.3118
C. 1.3174
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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.

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I used your notes and passed ... highly recommended!
Lauren

Lauren

Learning Outcome Statements

calculate and outright forward quotation from forward quotations expressed on a points basis or in percentage terms;

explain the arbitrage relationship between spot rates, forward rates, and interest rates;

calculate and interpret a forward discount or premium;

calculate and interpret the forward rate consistent with the spot rate and the interest rate in each currency;

CFA® 2024 Level I Curriculum, Volume 2, Module 15.