You are quoted the following market rates: Spot AUD/USD 1.0380-85 0/N AUD/USD swap 2.42/2.35 TIN AUD/USD swap 0.82/0.79 S/N AUD/USD swap 0.80/0.77 Where can you buy AUD against USD for value tomorrow?
A) 1.038579
B) 1.038582
C) 1.038418
D) 1.038421

Question

You are quoted the following market rates: Spot AUD/USD         1.0380-85 0/N AUD/USD swap         2.42/2.35 TIN AUD/USD swap         0.82/0.79 S/N AUD/USD swap         0.80/0.77 Where can you buy AUD against USD for value tomorrow?
A) 1.038579
B) 1.038582
C) 1.038418
D) 1.038421

Quizplus · Accepted Answer

To buy AUD against USD for value tomorrow, we need to look for the spot rate, which is quoted as 1.0380-85. We can buy AUD at the ask price of 1.0385. However, we also need to consider the cost of funding for holding AUD. We can see that the AUD/USD swap rates quoted are negative, which means there is a cost of funding for holding AUD.

Among the given options, the best choice is B, which has the highest ask price of 1.038582. This would minimize the cost of funding for holding AUD. Options A and C have lower ask prices, which would result in a higher cost of funding. Option D does not have a high enough ask price to be considered the best choice.

You Are Quoted the Following Market Rates: Spot AUD/USD 1