Multinational Business Finance

Question 1 (12 marks) Refer to Table 1. Assume U.S. dollar (USD) is the home currency. Please keep four decimals in solving the problems. a) Based on the mid rates, what is the current spot rate between SGD and USD in a direct quote? (2 marks) b) What is the outright one-month forward bid price for U.S. dollar in Japanese yen (quoted in yen/USD)? (2 marks) c) If you plan to use SGD to buy USD six months later, what is the relevant exchange rate in SGD/USD? (2 marks) d) According to the information provided in Table 1, is the 6-month yen sold at a forward premium or discount against USD? Calculate the premium or discount level per annum using the mid rates and interpret it. (3 marks) e) What is the bid-ask spread for the 1-month forward rates between SGD and USD? Interpret the spread