CFA Practice Question

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CFA Practice Question

The bid/offer for the spot and forward points for the USD/EUR rates are:

Spot: 1.2745/1.2758
One-month forward: 35/42

If you are selling the EUR one-month forward against USD, which rate should be used?

A. 1.2715.
B. 1.2780.
C. 1.2800.
Correct Answer: B

You should use the one-month bid rate: 1.2745 + 0.0035.

User Contributed Comments 4

User Comment
merbpr What is the logic behind this?
Oksanata if youare selling that you have to meet buyer's price
sargis It should be looked from the dealers side
davidt876 ask = buy base
bid = sell base
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