When given the FC/DC spot exchange rate and give the bid ask spreads.
You are asked to calculate the forward bid. How do you know whether to use the foreign or domestic interest rate bid or ask in the numerator or denominator?作者: dirk01 时间: 2013-3-31 12:58
If FC/DC, then (1+RFC)/(1+RDC)作者: jbaldyga 时间: 2013-3-31 12:58
I was referring to when to use the bid and ask quotes in the numerator and denominator…that basic fomula I understand.作者: anish 时间: 2013-3-31 12:58
I was doing the EOCs for this section last night, gave me a headache. 作者: hw0799 时间: 2013-3-31 12:58
Forward Bid = Spot Bid*(1+RDC(Bid)/1+RFC(ask))
Forward Ask = Spot Ask*(1+RDC(ask)/1+RFC(bid))
The way I remember is:
1) You only have foreign on top when using price levels to calculate real exchange rates. Anything else and it’s DOT. Domestic On Top.
2) Asking for bid forward, bid by bid on top.
3) Asking for ask forward, ask by ask on top.
Hope it makes sense - does for me.作者: soverby 时间: 2013-3-31 12:58
2) Asking for bid forward, bid by bid on top.
3) Asking for ask forward, ask by ask on top.
Yes, I got this but, i am trying to understand this. thanks.
