Question

A BRL/MXN spot rate is listed by a dealer at 0.1378. The 6-month forward rate is 0.14193. The 6-month forward points are closest to:

a. -41.3.
b. +41.3.
c. +299.7.
d. 0.14193

Answer 1

The 6-month forward points are calculated by subtracting the spot rate from the forward rate, multiplying by 10,000, and are closest to +41.3, making option b the correct answer.

Step-by-step explanation:

The provided information indicates that the spot rate of BRL/MXN is 0.1378, and the 6-month forward rate is 0.14193. To calculate the forward points, we subtract the spot rate from the forward rate and then multiply the result by 10,000 (since points are typically expressed in basis points or pips).

Calculation:

• Forward Rate = 0.14193
• Spot Rate = 0.1378
• Forward Points = (Forward Rate - Spot Rate) × 10,000
• Forward Points = (0.14193 - 0.1378) × 10,000
• Forward Points = 0.00413 × 10,000
• Forward Points = +41.3

Therefore, the 6-month forward points are closest to +41.3, which makes option b the correct answer.