A customer asks for a price in 3-month CHF/JPY. You quote 56/54. The customer deals at 54. What have you done?
A) Bought CHF against JPY spot and sold JPY against CHF 3-month forward
B) Sold CHF against JPY spot and bought CHF against JPY 3-month forward
C) Bought CHF against JPY spot and sold CHF against JPY 3-month forward
D) Bought JPY against CHF 3-month outright

Question

Quizplus · Accepted Answer

Quoting 56/54 means you are willing to sell CHF against JPY 3-month forward at a rate of 56 and buy at a rate of 54. The customer deals at 54, which means they are buying CHF and selling JPY at a rate of 54 for the 3-month forward. Therefore, you have bought CHF against JPY spot (at the current spot rate) and sold CHF against JPY 3-month forward (at the quoted rate of 56/54).

A Customer Asks for a Price in 3-Month CHF/JPY