Question
1. Use the following information to answer the next two questions. Suppose the spot quotes for the pound sterling and Mexican peso are $1.398189 and
1. Use the following information to answer the next two questions.
Suppose the spot quotes for the pound sterling and Mexican peso are $1.398189 and $.113033, respectively. What are the bid and ask quotes for pounds in terms of pesos? Round intermediate calculations to four decimal places.
| 12.3398; 12.3796 | |
| 12.3469; 12.3726 | |
| .080812 | |
| .097687 |
2. Find the ask quote for dollars in terms of pounds. Round intermediate steps to four decimals.
| .9994 | |
| .7153 | |
| .7148 | |
| .8158 |
3. Suppose a dealer's euro quote is $1.31150. How many euros would you receive in exchange for 500,000 dollars, rounded to the nearest euro?
| 655,500 | |
| 381,388 | |
| 370,370 | |
| 675,000 |
4. Suppose a banker observed the following direct spot quotations for dollars and euros.
Bank X: $1.1029-.32
Bank Y: $1.1034-.35
Find the abritrage profit available (in terms of dollars) to a banker with 2 million dollars at her disposal.
| 543.87 | |
| 400 | |
| 362.58 | |
| 255.16 |
5. Assume that a bank's quote for the peso is $.1133-71. Find the percentage bid-ask spread.
| .0123 | |
| .0325 | |
| .0355 | |
| .0483 |
6. Suppose that a Japanese importer agrees to purchase raw materials from Canada. The importer agrees to purchase the raw materials for C$650,000. The importer's bank provides the following qoutes for Canadian dollars: = C$.0085-.0091. How many yen will the importer pay to get the Canadian dollars needed to purchase his raw materials?
| 67,094,198.22 | |
| 76,470,588.24 | |
| 81,293,092.10 | |
| 71,428,571.43 |
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