1. Calculatethe outright forward quote from points (3 step process)

Example: JPY = USD (Class notes)

	Bid	Ask
Spot	118.27	118.37
Forward 90 days	-143	-140
+ Points
Outright forward quote90 day

C. Calculate the mid-rate of the spot rate and the outright forward quote presented in the example (above) in B.2.

For indirect quotes (i.e. quote expressed inforeigncurrency terms), the formula is

For direct quotes (i.e. quote expressed inhomecurrency terms), the formula is

1. Calculate the forward premium/discount using the midrates you calculated in C. above. Assume the United States is the home currency/country; therefore use the indirect or foreign quote formula.

Which currency is at a premium and which is at a discount?