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Foreign Exchange

Foreign Exchange. FOREX. 16. Computation of Forward Rate and how the forward quotes are expressed. a) FR = SR + Interest Differential between two countries (Converted into amount) b) Expression of Forward Quote :

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Foreign Exchange

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  1. Foreign Exchange FOREX

  2. 16. Computation of Forward Rate and how the forward quotes are expressed. a) FR = SR + Interest Differential between two countries (Converted into amount) b) Expression of Forward Quote : Outright FR SWAP Point (margin) Annualized Premium or Forward Point or Discount (in %) Outright FR : This is not directly quoted but it is derived using SR and Forward Point. This is an Exchange rate agreed today for settlement in future.

  3. SWAP point : It represents interest difference converted into amount or simply it is a difference betweenoutright FR and today's Spot Rate. SWAP Point = Rate of - Rate of × SR × n Quote Base 12 Annualized Premium or Discount : This also represent Interest differences but expressed in %. SR × rq - rb or SR × rq - rb 1 + rb Exact Approx

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