Hend Abuenein
Active Member
Hi
Please consider the following question:
- the 2 Y RFR in UK is at 8% ann con.com
- the 2 y RFR in France is 5% ann con.com
Current Franc to GBP exchange rate is that one unit of GBP costs 0.75 Francs...What is the 2 Y forward price of one GBP in terms of Francs with no arbitrage opportunities.
Now my question is : How do I decide which currency to name domestic and which is foreign??
I solved for GBP as domestic. But found answer in Schweser to assume the opposite.
On what grounds did they do that?
Please consider the following question:
- the 2 Y RFR in UK is at 8% ann con.com
- the 2 y RFR in France is 5% ann con.com
Current Franc to GBP exchange rate is that one unit of GBP costs 0.75 Francs...What is the 2 Y forward price of one GBP in terms of Francs with no arbitrage opportunities.
Now my question is : How do I decide which currency to name domestic and which is foreign??
I solved for GBP as domestic. But found answer in Schweser to assume the opposite.
On what grounds did they do that?
