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Dear Lisa,
Please assist me with this:
In Example 4 of Chapter 23 of the OpenTuition eBook, the exchange rates are quoted as:
Spot $/£ 1.5326 – 1.5385
3m forward 0.62 – 0.51 c pm“pm” means premium – meaning the $ gets stronger, so £1 can only buy fewer dollars which means we SUBTRACT to get the 3m forward rate
MY QUESTION IS:
What difference will it make if, for example, the exchange rate is quoted as:
Spot £/$ 1.5326 – 1.5385
3m forward 0.62 – 0.51 c pm
(Please note: £ 1.5 = $ 1)Does this also mean the pounds get stronger so we SUBTRACT to get the 3m forward?
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