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We now move to consider the presence and impact of bid-ask spreads. Bank A quotes bid-ask rates of 10.1512/EUR - NOK 10.1889/EUR, and EUR 0.8123/USD
We now move to consider the presence and impact of bid-ask spreads. Bank A quotes bid-ask rates of 10.1512/EUR - NOK 10.1889/EUR, and EUR 0.8123/USD - EUR 0.8371/USD. In all the following questions, use the appropriate bid or ask rate.
e. Derive the bid-ask quotes of , , and .
f. Suppose that you convert 10,000,000 NOK into EUR and then into USD. How many USD will this procedure yield?
g. Do the reverse conversion, i.e. convert back the amount of USD obtained in step b into NOK via the EUR. What is the percentage loss?
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