ICMA Exam FMFQ Topic 2 Question 60 Discussion

Actual exam question for ICMA's FMFQ exam

Question #: 60
Topic #: 2

[All FMFQ Questions]

Which of the following is not a factor in determining a fair value forward fx price?

ASpot rate

BInterest in the base currency

CInterest rate in the quoted currency

DView on where rates will be at the forward date

Show Suggested Answer

Suggested Answer: D

by Daryl at Jul 02, 2024, 12:03 PM

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William

4 months ago

Haha, this is too easy. The answer is clearly D - my crystal ball is in the shop, so I can't predict the future. What kind of question is this anyway?

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Levi

3 months ago

Yeah, I always struggle with questions like this. But D seems like the most logical choice.

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Twana

3 months ago

I agree, it's definitely D. Predicting future rates is always tricky.

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Hildegarde

3 months ago

Haha, this is too easy. The answer is clearly D - my crystal ball is in the shop, so I can't predict the future. What kind of question is this anyway?

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Vi

3 months ago

D) View on where rates will be at the forward date

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Sang

4 months ago

C) Interest rate in the quoted currency

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Louis

4 months ago

B) Interest in the base currency

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Antione

4 months ago

A) Spot rate

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Martin

5 months ago

You're right, I didn't consider that. It could be C) Interest rate in the quoted currency.

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Jean

5 months ago

I'm going with C. The quoted currency rate is crucial, otherwise how would you know the real value of the forward contract? Duh!

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Rasheeda

3 months ago

I see your point, but I still think C is the correct answer. The interest rate in the quoted currency plays a significant role in determining the fair value.

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Nieves

3 months ago

I agree with you, but I'm leaning towards D. Having a view on where rates will be at the forward date can also impact the fair value.

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Lang

3 months ago

I think it's A. The spot rate is definitely important in determining the fair value of a forward fx price.

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Adelaide

3 months ago

I see your point, but I still think it's C. The interest rate in the quoted currency plays a big role in determining the fair value forward fx price.

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Sonia

3 months ago

I agree with you, the spot rate is important. But I'm going with D. Your view on where rates will be at the forward date is also crucial.

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Leslee

4 months ago

I think it's A. The spot rate is definitely a factor in determining the fair value forward fx price.

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Alline

5 months ago

It's gotta be A! The spot rate is the foundation, everything else just adjusts the price from there. This question is a piece of cake!

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Alaine

5 months ago

But the interest rate in the quoted currency is also important, so it could be C) Interest rate in the quoted currency.

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Martin

5 months ago

I disagree, I believe the answer is B) Interest in the base currency.

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Hmm, I think the correct answer is D. The forward FX price is determined by the spot rate, interest rates in both currencies, and the time to maturity. Your personal views on future rates shouldn't factor in.

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Viva

4 months ago

Yeah, D makes sense. It's more about the current rates and not personal predictions.

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Fallon

4 months ago

I agree, D is the correct answer. It's all about the spot rate and interest rates.

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Alaine

6 months ago

I think the answer is D) View on where rates will be at the forward date.

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ICMA Exam FMFQ Topic 2 Question 60 Discussion

Contribute your Thoughts:

William

Levi

Twana

Hildegarde

Vi

Sang

Louis

Antione

Martin

Jean

Rasheeda

Nieves

Lang

Adelaide

Sonia

Leslee

Alline

Alaine

Martin

Gail

Viva

Fallon

Alaine