CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

A ______ exists when the ______ is higher than the spot rate.

A. discount; forward rate
B. discount; futures rate
C. premium; forward rate
Correct Answer: C

For example, if the one-month forward exchange rate is $:CNY (Chinese currency) = 6.3100 and the spot rate is $:CNY = 6.2935 then the dollar quotes with a premium of CNY0.0065.

User Contributed Comments 3

User Comment
Shaan23 The dollar would quote at a premium but the chinese would be at a discount.
maryprz14 6.3100 - 6.2935 = 0.0156?
myron check your math @maryprz14: it is 0.0165.
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