If EUR/USD is 1.1025-28 and the 6- month swap is 112.50/113, what is the 6-month outright price?
A) 1.1380-1.11405
B) 1.11375-1.1141
C) 1.09125-1.0915
D) None of these

Question

Quizplus · Accepted Answer

To calculate the outright price, we need to add or subtract the swap points from the spot rate. The 6-month swap points are 112.50/113, which means the market expects the euro to depreciate against the USD by 112.50/10000 or appreciate by 113/10000 in 6 months.

Since the spot rate is 1.1025-28, we can take the midpoint (1.1027) and add/subtract the swap points to get the outright price. If we add the swap points, then the outright price is 1.1027 + 0.00113 = 1.1137. If we subtract the swap points, then the outright price is 1.1027 - 0.00112 = 1.10158.

Therefore, the outright price is 1.10158-1.1137 or 1.11375-1.1141.

Option B is the closest to this range, so it is the best choice.

If EUR/USD Is 1