forward exchnage rate Quote

CFA Level I Economics
#1

These statements use two different formula for forward quotes:

  1. For example, a forward quote of +25 when the USD/GBP spot exchange rate is 1.4158 means that the forward exchange rate is 1.4158 + 0.0025 = 1.4183 USD/GBP.

  2. A forward exchange rate quote of +1.78%, when the spot USD/GBP exchange rate is 1.4158, means that the forward exchange rate is 1.4158 (1 + 0.0178) = 1.44 USD/GBP.

How do I figure out when to multiple and When to add the Forward Quote to the exchange rate??

Thanks

#2

If it’s a percentage, multiply by (1 + %).

If it’s not a percentage, add it.