Assignment- International Financial Management
Cross quotes
A dealer's bid and ask quotes for the listed currencies are as follows:
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Australian dollar (AUD/USD)
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0.7451 - 0.7453
|
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Brazilian real (USD/BRL)
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3.1900 - 3.1910
|
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British pound (GBP/USD)
|
1.2233 - 1.2236
|
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Canadian dollar (USD/CAD)
|
1.3153 - 1.3157
|
|
Euro (EUR/USD)
|
1.0595 - 1.0597
|
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Japanese yen (USD/JPY)
|
114.94 - 114.96
|
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Mexican peso (USD/MXP)
|
21.842 - 21.855
|
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New Zealand dollar (NZD/USD)
|
0.7060 - 0.7063
|
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Thai baht (USD/THB)
|
35.390 - 35.550
|
|
Egyptian pound (USD/EGP)
|
18.650 - 19.650
|
|
South Korean won (USD/KRW)
|
1186.3 - 1187.3
|
|
Swiss franc (USD/CHF)
|
1.0120 - 1.0123
|
1a. If a customer sells 1m euros to the dealer and uses the dollars received to purchase British pounds, how many pounds will the customer receive?
b. Based on part a, what is the implied cross rate (to sell euros and buy pounds)?
c. If a customer sells 1m British pounds to the dealer and uses the dollars received to purchase euros, how many euros will the customer receive?
d. Based on part c, what is the implied cross rate (to sell pounds and buy euros)?
e. If the two exchange rates from b and d are stated with the euro as the base currency, what are the implied bid and ask prices.
2a. If a customer sells 1m Brazilian real to the dealer and uses the dollars received to purchase Thai baht, how many baht will the customer receive?
b. Based on part a, what is the implied cross rate (to sell real and buy baht)?
c. If a customer sells 1m Thai baht to the dealer and uses the dollars received to purchase Brazilian real, how many real will the customer receive?
d. Based on part c, what is the implied cross rate (to sell baht and buy real)?
e. If the two exchange rates from b and d are stated with the real as the base currency, what are the implied bid and ask prices.
3a. If a customer sells 1m Australian dollars to the dealer and uses the dollars received to purchase Swiss francs, how many francs will the customer receive?
b. Based on part a, what is the implied cross rate (to sell Australian dollars and buy francs)?
c. If a customer sells 1m Swiss francs to the dealer and uses the dollars received to purchase Australian dollars, how many Australian dollars will the customer receive?
d. Based on part c, what is the implied cross rate (to sell Swiss francs and buy Australian dollars)?
e. If the two exchange rates from b and d are stated with the Australian dollar as the base currency, what are the implied bid and ask prices.
4. Determine the British pound/Canadian dollar cross rates (quote them as GBPCAD)
5. Determine the Australian dollar/New Zealand dollar cross rates (quoted them as AUDNZD).
6. Determine the Mexican peso/Japanese yen cross rates (quoted however you prefer, but specify whether your quote is JPYMXN or MXNJPY).