2 As a currency trader, you have obtained the following quotes from HSBC's FX dealer: S/ Bid 1.3250 1.3273 1.3311 Ask 1.3265 1.3298 1.3341 Spot a) If you wanted to buy 10 million 1-month forward, how much would it cost you? b) If you wanted to sell $25 million 3-months forward, how much would you receive? c) If you wanted to buy $25 million 3-months forward, how much would it cost you? d) Compute the spot, 1-month and 3-month forward transaction costs (as a percentage) faced by the customer 3.A FX dealer in London is quoting the following exchange rates between the Yen (JPY) and Australian Dollar (AUD) PY/AUD Bid 88.05 87.80 87.15 Ask 88.22 Spot 3-m f a) Ifa customer wants to buy AUD 5 million in the spot market, how much would it cost the 87.58 customer? b) If a customer wants to sell JPY 80 million in three months forward, how much would the customer receive? c) Compute the spot, 1-m forward, and 3-m forward transaction costs as a percentage faced by the customer 4. Looking at your answers in 2 (d) and 3 (c), briefly compare and comment on the transaction costs in the two cases (-$ vs. , and JPY vs. AUD) Looking at the quotations in 2 and 3, what can you say about the market's expectations about the S versus euro, and JPY versus AUD? (expectations in terms of how they are expected to change)