Question
A bank is quoting the following exchange rates against the dollar for the Swiss franc and the Australian dollar: USD:CHF = 1,6930 90 USD:ASD
A bank is quoting the following exchange rates against the dollar for the Swiss franc and the Australian dollar:
USD:CHF = 1,6930 – 90
USD:ASD = 1,9026 – 40
An Australian firm asks the bank for a ASD:CHF quote.
- What would the ASD:CHF bid price represent?
(1 marks)
- What would the ASD:CHF ask price represent?
(1 marks)
- “The Bid - Ask spread in each step in the calculation of the cross rate is expected to be favour of the bank”. Is this statement true or false? Explain.
(2 marks)
- Describe 5 factors that would dictate the size of Bid-Ask spread and explain how they affect the
Step by Step Solution
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Step: 1
The ASDCHF bid price represents the exchange rate at which the bank is willing to buy Swiss francs CHF and sell Australian dollars ASD It is the lower ...
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Step: 2
Step: 3
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International Financial Management
Authors: Cheol S. Eun, Bruce G.Resnick
6th Edition
71316973, 978-0071316972, 78034655, 978-0078034657
