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 (/$)				Pound: Spot and Forward ($/)
	Mid Rates	Bid	Ask		Mid Rates	Bid	Ask
Spot	129.59	129.55	129.63		1.4454	1.4452	1.4456
Forward Rates
1 Month	129.42	-18	-16		1.4435	-20	-18
6 Months	128.40	-120	-118		1.4310	-146	-142

1. Based on the mid rates, what is the current spot rate between USD and pound in an indirect quote?

(2 marks)

2. What is the outright one-month forward bid price for dollars in Japanese yen (quoted in yen/USD)?

(2 marks)

3. If you plan to use USD to buy pound six months later, what is the relevant exchange rate in USD/pound?

(2 marks)

4. 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)

5. What is the bid-ask spread for the 1-month forward rates between USD and pounds? Interpret the spread.

(3 marks)