CFA® Level I question of the day
22 October 2026 · Economics
Spot USD/EUR is 1.0800 (dollars per euro). The 90-day rates are 5.0% for USD and 3.0% for EUR, quoted annually on an actual/360 basis. The 90-day forward points are closest to:
Show the answer and explanation
Answer: C. +53.6
F = 1.0800 x (1 + 0.05 x 90/360)/(1 + 0.03 x 90/360) = 1.0800 x 1.0125/1.0075 = 1.08536. Points = (1.08536 - 1.0800) x 10,000 = +53.6, a premium on the euro.
- A. +209.7 - Using the full annual rates without scaling them to 90/360 treats the 90-day contract as a one-year contract.
- B. -53.3 - Placing the euro rate in the numerator reverses the formula; the price currency's rate belongs on top.
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