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Selling Quotes for Foreign Currencies in New York
Country-Currency	Contract	$/Foreign
Canada-dollar	Spot	.8450
	30-day	.8415
	90-day	.8390
Japan-yen	Spot	.004700
	30-day	.004750
	90-day	.004820
Switzerland-franc	Spot	.5150
	30-day	.5182
	90-day	.5328

a. An American business needs to pay (a) 15,000 Canadian dollars, (b) 1.5 million yen, and (c) 55,000 Swiss francs to businesses abroad. What are the dollar payments to the respective countries?

b. An American business pays $20,000, $5,000, and $15,000 to suppliers in, respectively, Japan, Switzerland, and Canada. How much, in local currencies, do the suppliers receive?

c. Compute the indirect quote for the spot and forward Canadian dollar contract.

d. You own $10,000. The dollar rate in Tokyo is 216.6752. The yen rate in New York is given in the preceding table. Are arbitrage profits possible? Set up an arbitrage scheme with your capital. What is the gain (loss) in dollars?

e. Compute the Canadian dollar/yen spot rate from the data in the preceding table

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9791981

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