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Hi John,
The current spot rate for dollar/euro is $/€ 2.000 +/- 0.003. The dollar is quoted at 0.2c premium for the forward rate.
What will a $2000 receipt be translated to at forward rate?
In the answer they added 0.003 to 2.000 but my question is how do I know when to add and when to subscribe with the +/-?
The spread always as the lower rate first and the higher rate second.
So 2.000 +/- 0.003 is the same as 1.997 – 2.003
Then deciding which of the two rates to use for a receipt is the rules that I go through in the lecture.
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