1

Assume the quotes indicated below are from a dealer in the NY currency market. Forward prices...

Question

Assume the quotes indicated below are from a dealer in the NY currency market. Forward prices...

Assume the quotes indicated below are from a dealer in the NY currency market.

Forward prices are quoted as the absolute forward premium or discount (not percentage) in basis points (one basis point = .0001).

Part 1. Forward exchange rates

1a. If the dealer’s spot market quotes for the British pound (£) are 1.3195 1.3200, and the dealer’s 6-month forward quotes for the euro are: -20 -12, what are the dealer’s effective 6-month forward bid and ask prices for the pound?

b. If a customer were to enter a 6-month forward contract with this dealer to sell $1m to obtain British pounds, how many pounds would the customer receive in six months?

2a. If the dealer’s spot market quotes for the New Zealand dollar (NZ$) are: 0.6838 0.6839, and the dealer’s 1-year forward quotes for the New Zealand dollar are: 43 47, what are the dealer’s effective 1-year forward bid and ask prices for the New Zealand dollar?

b. If a customer were to enter a 1-year forward contract with this dealer to sell NZ$1m to obtain US dollars, how many US dollars would the customer receive in one year?

Answers

Be as 1-317s $1-3188Cb 1 3188 Britishトound-1 S82650?Spot sate en Z = US 0.6838 0.6839 0043 07theu th ih The US N $ Inn X US$ 0.6881 =


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