Exam 4: The Market for Foreign Exchange

The S$/$ spot exchange rate is 1.60,the C$/$ spot rate is 1.33 and the S$/C$ 1.15.Determine the triangular arbitrage profit that is possible if you have $1,000,000.

The foreign exchange market is:

Exchange rates are quoted on American terms if:

Which of the following is true if one year forward rate is F = 1.83$/£; current spot rate is S = 1.81$/£; and interest rates are i = 3.5%,and i* = 3% (where exchange rates are quoted in $/£,i is the interest rate in the U.S.and i* is the interest rate in the U.K.)?

The following quotes are given for the Euro against the US dollar: 0.9075 - 85,15-10,22-11,30-15 for the spot,one month,three months and six months forward contracts. a)Calculate the outright quotations and the spread for each maturity. b)Is the dollar at a forward premium or discount? c)Where are the interest rates higher?

On average,worldwide daily trading of foreign exchange is:

If the $/£ bid and ask prices are $1.50 and 1.51,respectively,the corresponding £/$ bid and ask prices are:

Given the following information: Bank A: $\quad$ SF $1.5 / \$$ Bank B: $\quad \$ 1.6 /$ pound Bank C: $\quad$ pound 0.45/SF a)What kind of arbitrage is possible? b)If you have SF100,000 for the arbitrage,what arbitrage profit can be made? c)At what exchange rate at the Credit Suisse would there be no arbitrage (assume that the other two exchange rates don't change)?

If F/S > (1 + i)/(1 + i*)(where exchange rates are quoted in $/£,i is the interest rate in the U.S.and i* is the interest rate in the U.K.),which of the following is true?

The current spot exchange rate is $1.6/euro and the 6-months forward rate is $1.63/euro.You think that the spot rate will be $1.62/euro in six months.Assume that you can buy or sell euro 100,000. a)What would be your expected profit from speculating in the forward market? b)What would be you profit if the actual spot rate in 6 months is $1.60/euro?

The world's largest foreign exchange trading center is:

The US dollar is quoted directly against the Canadian dollar (US$/C$)and indirectly against the yen (¥/US$).In order to get the yen - Canadian dollar cross rate you need to:

If CIBC posts 1.10 CA$/US$ - 1.14 CA$/US$ bid-ask exchange rates,Scotiabank posts 1.12 CA$/US$ - 1.15 CA$/US$ bid-ask exchange rates,and RBC posts 1.13 CA$/US$-1.16 CA$/US$ bid-ask exchange rates,which of the following statements is correct:

If F/S < (1 + i)/(1 + i*)(where exchange rates are quoted in $/£,i is the interest rate in the U.S.and i* is the interest rate in the U.K.),which of the following is true?

Assume the following quotes: 1)Bank A: $1.5400/pound 2)Bank B: EURO 1.6000/pound 3)Bank C: $0.9700/EURO a)Can a trader make a profit on these quotes? b)Assume that the trader has $1,000,000 or the equivalent in another currency available for the transaction.What profit can the trader make?

The $/CD spot bid-ask rates are $0.7560-$0.7625.The 3-month forward points are 12-16.Determine the $/CD 3-month forward bid-ask rates.

Which of the following is true given the following quotes for foreign exchange: 1.69-1.71$/£; 1.44-1.46$/€; 1.14-1.16€/£

Most foreign exchange transactions are for:

Which of the following is true given the following quotes for foreign exchange: 1.68-1.70$/£; 1.43-1.45$/€; 1.13-1.15€/£

The speculator