Question

1. Sheridan Pharma just received revenues of $3,164,700 in Australian dollars (A$). Management has the following exchange rates: A$2.69500/£ and $1.5906/£. What is the U.S. dollar value of the company’s revenues? (Round intermediate calculation to 4 decimal places, e.g. 15.2578 and final answer to the nearest whole dollar, e.g. 5,275.)\

2. Barclays Bank of London has offered the following exchange rate quotes: ¥196.50/£ and Korean won 13.7470/¥. What is the cross rate between the Korean won and the British pound? (Round answer to 2 decimal places, e.g. 15.25. Do not enter currency symbols in your answer.)

3.The spot rate on the London market is £0.5515/$, while the 90-day forward rate is £0.5596/$. What is the annualized forward premium or discount on the British pound? (Round answer to 2 decimal places, e.g. 17.54%. Use 360 days for calculation.)

4. Venkat Ram purchased a pair of dress shoes in Italy for €131.25. If the spot exchange rate is $1.5621/€, what did the shoes cost in dollars? (Round your final answer to two decimal places.)

5. Sunland Autos has contracted with an Indian software firm for design software. The payment of 22,400,000 rupees (Rs) is due in 30 days. What is the cost in dollars if the 30-day forward rate is Rs70.00/$. (Round answer to 2 decimal places, e.g. 15.25.)

6.Zylex Corporation's German unit is looking to borrow €4.5 million from Deutsche Bank. Deutsche Bank quotes a rate of three-month LIBOR plus 0.5 percent for the 90-day loan. Currently, the three-month LIBOR is 4.175 percent. If the exchange rate on the payoff date is €0.8334/$, what is the dollar cost of the loan? (Round your final answer to two decimal places.)

7. A foreign exchange dealer is willing to buy the New Zealand dollar (NZ$) at $0.7621/NZ$ and will sell it at a rate of $0.7714/NZ$. What is the percentage bid-ask spread?
(Round your final answer to two decimal place places.)

Answer 1

1. US dollar value = Amount in Australian Dollar * No. of pounds/ Australian Dollar * No. of US dollars/ pound

= Amount in Australian Dollar / (No. of Australian Dollar / Pound ) * No. of US dollars/ pound

= 3164700 / 2.695 *    1.5906

= US $1867818.857

or US $ 1,867,819