Question

Questions 1-6. Given the following quotes for the euro, direct in Frankfurt, Germany, for the Canadian dollar, answer the following. (When calculating indirect quotes, round to 4 decimal places). Spot 90 day forward 180 day forward 6546 Bid 6558 .6553 Ask 6562 6560 6553 -12

Answer 1

4) Euro/C$ Ask Quote=0.6562 (Spot)

  Euro/C$ Ask Quote=0.6560(90 Day forward)

Forward Premium/(Discount) on C$ vs Euro = ((Forward Rate-Spot Rate)/Spot Rate)*100*(360/N)

where N= No of days Forward

So, Forward Premium/(Discount) on C$ vs Euro on 90 day ask quote=((0.6560-0.6562)/0.6562)*100*(360/90)

=(0.12%)   (Discount)

Since the 90 day forward direct ask quote is lower than the spot rate, the C$ is at a forward discount of 0.12%

5)

Euro/C$ Quotes (Direct Quote)	Bid Rate	Ask Rate
Spot Rate	0.6558	0.6562
180 day forward	0.6546	0.6553
C$ /Euro Quotes (In-direct Quote)
Spot Rate	1/0.6562 =1.5239	1/0.6558 =1.5249
180 Day forward	1/0.6553 =1.5260	1/0.6546 =1.5277

C$ /Euro Bid Quote = 1.5239 (Spot)

C$ /Euro Bid Quote= 1.5260 (180 Day forward)

Forward Premium/(Discount) on C$ vs Euro = ((Spot-Forward)/Forward)*100*(360/N)

So, Forward Premium/(Discount) on C$ vs Euro on 180 day bid quote=((1.5239-1.5260)/1.5260)*100*(360/180)

=(0.28%) (Discount)...Rounded of to 2 decimals.

6)

Euro/C$ Quotes (Direct Quote)	Bid Rate	Ask Rate
Spot Rate	0.6558	0.6562
90 Day forward	0.6553	0.6560
C$ /Euro Quotes (In-direct Quote)
Spot Rate	1/0.6562 =1.5239	1/0.6558 =1.5249
90 Day forward	1/0.6560 =1.5244	1/0.6553 =1.5260
90 day Swap points of C$/Euro	5	11