What is the forward premium or discount

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Reference no: EM131278658

1. Suppose the euro is quoted at 0.6064-80 in London and the pound sterling is quoted at 1.6244-59 in Frankfurt.
a. Is there a profitable arbitrage situation? Describe it.

b. Compute the percentage bid-ask spreads on the pound and euro.

2. As a foreign exchange trader at Sumitomo Bank, you have a customer who would like spot and 30-day forward yen quotes on Australian dollars. Current market rates are

2248_Table 3.jpg

a. What bid and ask yen cross rates would you quote on spot Australian dollars?

b. What outright yen cross rates would you quote on 30- day forward Australian dollars?

c. What is the forward premium or discount on buying 30-day Australian dollars against yen delivery?

Reference no: EM131278658

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