PLEASE ANSWER ALL

Question 1 (12 marks) Refer to Table 1. Assume the US dollar is the home currency. Please keep 4 decimals in solving the problems. Table 1 Yen: Spot and Forward (Y/S) Pound: Spot and Forward (S/E) Mid Rates Bid Ask Mid Rates Bid Ask Spot 129.87 129.82 129.92 1.4484 1.4481 1.4487 Forward Rates 1 month 129.68 -20 -18 1.4459 -26 -24 6 months 128.53 - 136 -132 1.4327 - 160 -154 Swaps 117.65 1232 1212 1.4250 - 238 - 230 3 year 115.50 1452 1422 1.4225 -265 -253 2 year a) Based on the mid rates, what is the current spot rate between USD and pound in an indirect quote? (2 marks) b) What is the outright one-month forward bid price for dollars in Japanese yen (quoted in yen/USD)? (2 marks) c) If you plan to use USD to buy pound six months later, what is the relevant exchange rate in USD/pound? (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 USD and pounds? Interpret the spread