Question: Suppose Credit Suisse Quotes spot 90 day forward rates of $0.7957-60, 8-13.
- What are the outright 90 day forward rates that Credit Swiss is quoting?
- What is the forward discount or premium associated with buying a 90-day Swiss francs?
- Compute the % bid ask spreads on spot and forward Swiss Francs?
a. The outright forwards are: bid rate = $0.7965 (0.7957 + 0.0008) and ask rate = $0.7973 (0.7960 + 0.0013). The first rate is always the bid rate and the second rate is the ask rate. ...
In about 125 words, this solution explains the calculation of forward rates, forward premium and discount and the bid ask spread. All required calculations and equations are provided.