Hello, I have a couple of questions about currencies: 1. Marked to market: I keep getting confused with the cashflow calculation. In some cases we subtract the new all in fwd rate from the old all in fwd rate. In others, we do the opposite. What is the logic? I understand it has something to do with long/short and appreciation/ depreciation of the base currency. 2. How can we calculate the cross rate for C/A: A/B bid offer (100/100.1) and C/B bid offer (101/101.1). Do we take the inverse of each figure?
Also, if the question says the firm sold EUR 1,000,000 against the GBP, this means that the firm originally bought GBP. So shouldn’t the offsetting position be selling GBP?