Page 50 - FINAL CFA SLIDES DECEMBER 2018 DAY 6

Session Unit 5:
20. Currency Exchange Rates (B/B/A/B/C/A/A/B)
B. So GBP/USD price is 1 / 1.533 = 0.6523 and the F1 GBP/USD price is 1 / 1.508 = 0.6631. Because the F
> S, we say the $ is at a forward premium of 0.6631 / 0.6523 – 1 = 1.66%.

Alternatively, we can calculate this premium with the given quotes as spot/forward – 1
to get 1.533 / 1.508 – 1 = 1.66%.