1. Suppose the spot ask exchange rate, S($|), is $1.90 = 1.00 and the spot bid exchange rate, Sb($|), is $1.80 = 1.00. If you have $10,000,000 and you buy British pounds and then sell them immediately, how much of your $10,000,000 would be "eaten" by the bid-ask spread (or, how much would you be paying for the trades)? + A. $526,315.79 B. $292,397.66 + C. $100,000.00 D. none of the above + 2. The technical approach to currency forecasting: - A. works better than the fundamental approach at long horizons B. assumes that past trends will occur again- C. is consistent with market efficiency- D. applies interest rate parity to identify undervalued currencies E. none of the above. t 3. You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.00 = 1.00 and the dollar-pound exchange rate is quoted at $2.00 = 1.00. If a bank quotes you a cross rate of 1.00 = 2.00 how can you make money? - + A. No arbitrage is possible. + B. Sell dollars for euro, sell euro for pounds, sell pounds for dollars. C. Sell dollars for pounds, sell pounds for euro, sell euro for dollars.- D. Sell pounds for euro, sell euro for dollars, sell dollars for pounds. 1. Suppose the spot ask exchange rate, S($|), is $1.90 = 1.00 and the spot bid exchange rate, Sb($|), is $1.80 = 1.00. If you have $10,000,000 and you buy British pounds and then sell them immediately, how much of your $10,000,000 would be "eaten" by the bid-ask spread (or, how much would you be paying for the trades)? + A. $526,315.79 B. $292,397.66 + C. $100,000.00 D. none of the above + 2. The technical approach to currency forecasting: - A. works better than the fundamental approach at long horizons B. assumes that past trends will occur again- C. is consistent with market efficiency- D. applies interest rate parity to identify undervalued currencies E. none of the above. t 3. You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.00 = 1.00 and the dollar-pound exchange rate is quoted at $2.00 = 1.00. If a bank quotes you a cross rate of 1.00 = 2.00 how can you make money? - + A. No arbitrage is possible. + B. Sell dollars for euro, sell euro for pounds, sell pounds for dollars. C. Sell dollars for pounds, sell pounds for euro, sell euro for dollars.- D. Sell pounds for euro, sell euro for dollars, sell dollars for pounds