CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

If the spot rate is $:CNY (Chinese yuan) = 6.3000 and the forward exchange rate is $:CNY = 6.3200, then the ______

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.
Correct Answer: A

A premium exists when the forward exchange rate is higher than the spot rate and a discount exists otherwise. If the one-month forward exchange rate is $:CNY = 6.3200 and the spot rate is $:CNY = 6.3000 then the dollar quotes with a premium of 0.0200 CNY.

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
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