I just did the Practice Assessment Speckley and the first question asks for the currency forward price.
The spot we are given is USD/EUR. I thought that would mean that USD is the foreign, and EUR is the domestic a-la f/d convention. But the domestic is the US rate. Is there a rule that will tell me which is which?
I don’t have the assessment in front of me. You’re always buying or selling the currency in the denominator. Focus on this rule rather than price, base, foreign, domestic. If the fraction increases over time, it means that th currency in the denominator has strengthened. You might want to go to the site financialexamhelp123. It’s super helpful (and free).
For the purpose of the exam, the domestic currency is usually the first currency in the exchange rate quote; so If the quote is $0.82/EUR, the domestic currency here is the USD, while the EUR is the foreign currency.
Kindly try your hands on some questions, and let me know what if this works for you.