Suppose the following direct quotes are received for spot and one? month French francs in New York: .1160?684?Then the outright 30? day forward quote for the French franc is:

Question

Quizplus · Accepted Answer

To calculate the forward rate for one month, we need to add the one-month interest rate differential to the spot rate. Assuming that the interest rate in the US is 2% and in France is 1%, the interest rate differential is (2%-1%)/12 = 0.83%.

The calculation is as follows:

Forward rate = Spot rate + (Spot rate x Interest rate differential x Time factor)

Forward rate = 0.1160 + (0.1160 x 0.0083 x 1/12)

Forward rate = 0.1160 + 0.000001012

Forward rate = 0.1164

Therefore, the outright 30-day forward quote for the French franc is 0.1164, which is closest to option B: 0.1164?74.

Suppose the Following Direct Quotes Are Received for Spot and One