QUESTIONS ON FX PRODUCTS- SOLUTIONS

1. - If the EUR/TRY is quoting at 20.50:

a) It means the market will exchange TRY 20.50 per 1 Euro

b) It means the market will exchange TRY 0.0488 per 1 Euro

c) It means the market will exchange 20.50 Euros per 1 Pound

2. – A FX Trader must quote a price in EURMXN in €10m. It is early in the morning in Madrid and
the market is very illiquid. Prices in other currency pairs are the following;
EURUSD is quoting 1.0588 1.0589
USDMXN is quoting 21.6100 21.6300
What would the price (bid – offer) in EURMXN to quote to the client?
a) Bank will quote 22.8807 bid and 22.9040 offer
b) Bank will quote 22.8828 bid and 22.9018 offer
c) Bank will quote 20.4099 bid and 20.4269 offer

3. – Considering EURUSD and USDMXN data in the previous exercise, if the market price is
EURMXN 22.83 22.85, how much money could we make through a triangular arbitrage
(borrowing MXN 100,000)?
a) MXN 134,21
b) MXN 100,134
c) MXN 226,89

4. – You are an industrial company, based in Germany that imports some raw material from US,
having to pay a significant USD amount in December 2023:
a) You will have to hedge your risk by selling a 10-month EURUSD Forward / Outright
that would protect you against USD appreciation
b) You will have to hedge your risk by buying a 10-month EURUSD Forward / Outright
that would protect you against USD depreciation
c) It is necessary to wait until December to sell USDs and buy Euros
5. – You are a bank trader quoting a EURUSD 6-month tenor FX Swap at +81 +83 swap points
(spot reference 1.0900 $/€):
a) As a bank, at 81 I am buying EURs and selling USDs forward
b) As a bank, at 81 I am buying EURs and selling USDs in Spot
c) As a bank, at 83 I am buying EURs and selling USDs forward
d) As a bank, at 83 I am selling EURs and buying USDs in Spot

6. – Considering that the swap points of the EURUSD are quoting +81 +83 for a 6-month tenor
(spot reference 1.0900 $/€):
a) The EUR is quoting at premium
b) The USD is quoting at premium
c) The EUR is quoting at discount
d) None of the currencies is quoting at premium or discount

Table 1

Day 17-ago-X1 Tenor Maturity # Days EUR Rates USD Rates

Spot 21-ago-X1 1m 22-Sep-X1 31 -0,410% 0,930%
FX Spot 1.1317 2m 24-Oct-X1 63 -0,380% 1,140%
Act/360 3m 22-Nov-X1 92 -0,340% 1,170%
6m 22-Feb-X2 184 -0,230% 1,360%
9m 22-May-X2 273 -0,160% 1,460%
    12m 22-Aug-X2 365 -0,090% 1,560%

Considering the data of the table above

7. – EURUSD 6-month swap points are:
a) 0.009207
b) -9.207
c) 9.207
d) -0.009207

8. – A corporate that has an excess of Euros and needs Swiss Francs (CHF) to finance part of his
activity in 9 months, ask for a FX Swap price to his reference Bank. The bank is quoting the
following price:
 BID ASK

-38 pips (0.0038) -33 pips (0.0033)

Considering spot rate = 1.0720 SFr/€, forward rates are 1.0682 1.0687

a) The corporate will sell EURs in spot (buy CHFs) and buy them outright (sell CHFs) at
-33 pips
b) The corporate will buy CHFs in Spot (sell EURs) and sell them forward (buy EURs) at
-38 pips
c) The corporate will sell EURs in Spot (buy CHFs) and buy them forward (sell CHFs) at
-38 pips

9. – 6 months ago (180 days), you sold a EURUSD NDF contract to your reference bank in
€10,000,000 at 1.1400 $/€. The Fixing Spot rate has fixed at 1.1000 $/€. As you sell the contract:
a) The bank must pay me $400,000
b) I must pay the bank $400,000
c) The bank must pay me €200,000
d) I must pay the bank €200,000

10. – A 5-year Cross-Currency Swap (CCRS) is being quoted -45.125 -40.125 (against 3m
reference rates). You are expecting the demand of USDs to increase so that to anticipate to the
market movement:
a) You will buy the CCRS at -45.125
b) You will buy the CCRS at -40.125
c) You will sell the CCRS at -40.125
d) You will sell the CCRS at -45.125