Question
First Australian Bank (FAB) of Australia trades many currencies, including Australian dollars and Malaysian ringgit. Today, the bank gives a spot rate and a 12-month
- First Australian Bank (FAB) of Australia trades many currencies, including Australian dollars and Malaysian ringgit. Today, the bank gives a spot rate and a 12-month forward rate of A$0.6275-80, 6-12 for Malaysian ringgit. Based on this information:
(i) convert the rate above to the outright 12-month forward rate given by FAB
(ii) make inference of the 12-month annual forward discount or premium for ringgit
(iii) what is the percentage of bid-ask spread for spot and forward contract for ringgit.
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