Bank dealers in conversations among themselves use a shorthand notation to quote bid and ask forward prices in terms of forward points. This is convenient because

Question

Quizplus · Accepted Answer

Bank dealers use forward points to quote bid and ask forward prices because forward points can change more quickly than spot and forward quotes, and they can also remain relatively constant for long periods of time. Traders who are looking for violations of covered interest arbitrage are often primarily interested in the premium or discount differential measured in forward points, rather than the actual spot and forward exchange rates themselves. Therefore, both statements c and d are correct.

Bank Dealers in Conversations Among Themselves Use a Shorthand Notation