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Assuming a Flat Yield Curve in Both Currencies, When Quoting

Question 48

Multiple Choice

Assuming a flat yield curve in both currencies, when quoting a 1- to 2-month forward FX time option price in a currency pair trading at a discount to a customer:


A) you would take as bid rate the bid side of the 2-month forward and as offered rate the offered side of the 1-month forward
B) you would take as bid rate the offered side of the 2-month forward and as offered rate the bid side of the 1-month forward
C) you would take as bid rate the offered side of the 1-month forward and as offered rate the offered side of the 2-month forward
D) you would take as bid rate the bid side of the 1-month forward and as offered rate the bid side of the 2-month forward

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