In that time I did two mocks
Mornin and afternoon
I did well in them too
There was a really weird q on bull spreads on one of them. The mock was from the Boston CFA society. I wish I could post the question but there was a lot of copywright stuff.
There was another weird q that I just need to ask about,
The q asked to explain who faces the credit exposure.
The situation was a bank who shorted the dollar against the mexican peso and the forward rate was bigger than the spot rate.
The answer key stated that the forward position had postive value to the bank so the credit risk is on the counterparty.
Can someone explain what the credit risk is on the counterparty means.
I thought the bank faced the credit exposure since the forward contract had positive value to the bank.