Homework Answers
rate positively ..
| i | Amount available to purchase GBP = | 10,000,000 | |
| ii | Buy rate = | 1.9 | |
| iii=i/ii | GBP bought = 10000000/1.9 | 5,263,157.89 | |
| iv | Sale rate = | 1.89 | |
| v=iii*iv | USD received from sale of GBP = | 9,947,368.42 | |
| vi=i-v | Loss on transaction = | 52,631.58 | |
| Ans = Loss of | $ 52,631.58 |
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Question 5: The spot ask exchange rate is $1.90 = £1.00 and the spot bid exchange...
Suppose the spot ask exchange rate, sa ($£), is $1.90 = £1.00 and the spot bid...
Suppose the spot ask exchange rate, sa ($£), is $1.90 = £1.00 and the spot bid exchange rate, S($1£), is $1.89 = £1.00. If you were to buy $10,000,000 worth of British pounds and then sell them five minutes later, how much of your $10,000,000 would be "eaten" by the bid-ask spread? Multiple Choice O $1,000,000 O $52910 $52,910 O $100,000 $52,632
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Use the following spot and forward bid-ask rates for the Australian dollar/U.S. dollar exchange rate from...
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Suppose the spot ask exchange rate, sa ($£), is $1.90 = £1.00 and the spot bid exchange rate, S($1£), is $1.89 = £1.00. If you were to buy $10,000,000 worth of British pounds and then sell them five minutes later, how much of your $10,000,000 would be "eaten" by the bid-ask spread? Multiple Choice O $1,000,000 O $52910 $52,910 O $100,000 $52,632
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5. (5 pts.) The current spot exchange rate is $1.55 1.00 and the three-month forward rate is $1.60 1.00. Consider a three-month American call option on €62.500 with a strike price of S 1.50·ei .00, if you pay an option premium of $5,000 to buy this call, at what exchange rate will you break-even?
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