Part-A

Suppose over the last decade the volatility of USD/CAD (USA dollar/Canadian dollar) kept decreasing, what would have happened to its bid-ask spread? Explain your answer with reasoning.

Part-B

An investor wishes to buy euros spot (at $1.3908) and sell euros forward for 180 days (at $1.3996). Is there any premium on 180-day Euro or is there any discount on 180-day forward? Show your workings.

Part-C

Suppose the direct quote of pound against USD in New York is 1.8110-5. What is the direct quote for dollars in London?