When a company contacts a bank and asks for a 3-month forward rate and is quoted by the bank's FX dealer AUD/USD0.9560-65 14.20,then the three month forward rate is:
A) AUD/USD0.9536-45
B) AUD/USD0.9540-51
C) AUD/USD0.9574-85
D) AUD/USD0.9580-79

Question

Quizplus · Accepted Answer

The three month forward rate is calculated by adding the forward points to the spot rate. In this case, the spot rate is AUD/USD 0.9560-65, and the forward points are 14.20. To get the forward rate, we add the forward points to the bid price (0.9560), giving us AUD/USD 0.9574. Therefore, the answer is C, AUD/USD 0.9574-85.

When a Company Contacts a Bank and Asks for a 3-Month