What is the result of combining a 1-month buy and sell FX swap with a 2-month sell and buy FX swap?
A) a 1x2 FRA short position
B) a 1- against 2-month buy and sell forward/forward FX swap
C) a 1- against 2-month sell and buy forward/forward FX swap
D) a 1- against 2-month forward/forward long position

Question

Quizplus · Accepted Answer

By combining the two swaps, we end up with a 1- against 2-month forward/forward FX swap where we sell the currency for 2 months and then buy it back at the end of the 2 months. Therefore, we have a sell and buy swap for the 2-month period, which results in a sell and buy forward/forward FX swap for that period.

What Is the Result of Combining a 1-Month Buy and Sell