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CFA Level I · CFA Level I Exam · Exchange Rate Calculations

The spot rate for AUD/EUR is 0.6200 and the 90-day forward points are quoted as +25 (scaled at 1/10,000). The 90-day forward AUD/EUR rate is closest to:

The forward rate is 0.6225. Forward points of +25 at a 1/10,000 scale equal 0.0025, which is added to the 0.6200 spot rate. The base currency, the euro, trades at a forward premium.

  1. A0.6175
  2. B0.6225Correct
  3. C0.6450

Explanation

+25 points equals 0.0025 at a 1/10,000 scale. Forward = 0.6200 + 0.0025 = 0.6225. 0.6175 subtracts the points; 0.6450 treats the points as 0.025.

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