Questions
FINS5512-Financial Markets & Institutions - T3 2025
Single choice
Suppose the spot rate is AUD1 = USD0.6956 and the 3-month forward points are 0.0038. The 3-month forward rate is:
Options
A.a. 0.6956
B.b. 0.6994
C.c. 0.6973
D.d. 0.6924
E.e. 0.6918
View Explanation
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Step-by-Step Analysis
To approach this question, start with the given spot rate and the forward points, then determine how the forward rate is calculated.
Option a: 0.6956. This simply repeats the spot rate and ignores the forward points entirely, so it cannot be the forward rate when forward points are provided.
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