On fixing date, the settlement payment of an NDF reflects the differential between the agreed forward rate and:
A) the fixing spot rate
B) the daily high
C) the days' average rate
D) the average rate over the NDF period

Question

Quizplus · Accepted Answer

The settlement payment of an NDF reflects the differential between the agreed forward rate and the fixing spot rate, which is the rate on the fixing date. This is because an NDF is a type of currency forward contract where the settlement is in cash and based on the difference between the NDF rate and the fixing spot rate on the settlement date. The daily high, days' average rate, and average rate over the NDF period may be used for informational purposes, but they are not directly relevant to the settlement payment calculation.

On Fixing Date, the Settlement Payment of an NDF Reflects