Mark to market forward valuation

CFA Level II Economics
#1

I know this formula down pat… But I got the wrong answer in Schwesers mock exam.

[(FP t - FP 0) X notional principle] / (1 + RF{price currency} X (days to maturity / 360)

As the investor in this problem, I can buy the base currency (USD/AUD - with AUD being the base currency) using the ask price - However Schweser went against this logic and used the bid price for the forward price that the investor can buy AUD. What the actual FUK are they doing here? I’m pretty sure any half witted dipshit taking this exam understands that in CFA exam land they always price currency’s XXX PER YYY, thus if a brokerdealer is telling me my spread on 60 day USD/AUD is 1.0491-1.0502 this means they’re selling the AUD in 60 days for 1.0502 therefore the applicable forward price in this formula is the offer price and not the bid.

Please help, I find it really disheartening that I got such an easy problem wrong 17 days out from the exam.

#2

Am I right/wrong with my frustrations??

#3

So no one has looked at the currency valuations readings this year?

#4

You’re using the bid price in this scenario because when you’re marking to market you’re unwinding the trade. So you are correct that when you buy the base currency you use the ask (down the ask)… but now since you’re hypothetically unwinding the trade you’re going to buy USD (up the bid).

#5

Makes total sense. Thank you.