Hi everyone,
On P178 Alternative investments book, example 8 question 1:
The U.S. based manager owns EUR foreign asset, and “goes long a forward contract on €1 denominated in dollars, in which the undelrying is the euro”
It shows the quotes at $0.862,
so I’m assuming it is $0.862 / €… which is a direct quote (domestic U.S. = price currency, per € foreign currency)…
My question is…
In this contract, wouldn’t the manager be selling € and going long USD? But the example says he’s going long a forward on €1 (isn’t that the base?) denominated in dollars, which I don’t quite get…
Can someone please clairify the quote convention, haven’t really seen it like that.
Appreciate it.