Questions 33-36 are based on the following information: Country in U.S. $  Per U.S. $ Tuesday Monday Tuesday Monday Britain (Pound) £62,500 1.6000 1.6100 0.625 0.6211 1 Month Forward 1.6100 1.6300 0.6211 0.6173 3 Months Forward 1.6300 1.6600 0.6173 0.6024 6 Months Forward 1.6600 1.7200 0.6024 0.5814 12 Months Forward 1.7200 1.8000 0.5814 0.5556 Euro €62,500 1.2000 1.2000 0.833333 0.833333 1 Month Forward 1.2100 1.2100 0.82645 0.82645 3 Months Forward 1.2300 1.2300 0.813008 0.813008 6 Months Forward 1.2600 1.2600 0.793651 0.793651 12 Months Forward 1.2900 1.3200 0.775194 0.7575758 Using the table above, what is the spot cross-exchange rate between pounds and euro (using Tuesday quote)?

Country in US$   Bid Ask Swiss Franc (CHF) 0.7648 0.7652 Euro (€) 1.4000 1.4200   What are the cross-exchange rates for Swiss Francs priced in euro (€/CHF)? Please leave 4 decimal points for your answer. Bid: € [l1] /CHF Ask: € [l2] /CHF

The current spot exchange rate is $1.06/CAD, and the 3-month forward rate is $1.20/ CAD. a) If you speculate that the future spot rate in 3 months will be $1.10/CAD. What kind of position (long/short) that you would like to enter in the forward market? Answer: You would like to enter a [l1] (long/short) position in the forward contract. b) What is your expected profit in USD? Suppose that you can buy or sell CAD 100,000. Answer: Your expected profit will be $ [l2] . c) At expiration, the spot price turns out to be $1.25/ CAD. Do you profit or do you lose at maturity date? What is the size of your profit/loss in USD? Answer: You [l3] (profit/lose). The size of your total profit/loss is $ [l4] . (please calculate your profit/loss in USD and use negative sign to indicate loss)

The current bid price is $1.5/€ and ask price is $1.6/€. If an individual investor wants to buy Euro using $1000. How much Euro he will get?

In conversation, Interbank FX trades use a shorthand abbreviation in expressing spot currency quotations. Consider a $/£ bid-ask quote of $1.5170-$1.5184. The “big figure”, assumed to be known to all traders is:

The AUD/$ spot exchange rate is AUD1.60/$ and the SF/$ is SF1.25/$. The AUD/SF cross exchange rate is:

Transaction Exposure Problem: Suppose that you (i.e., company XYZ) are a US-based importer of goods from Canada. You expect the value of the Canada dollar to increase against the US dollar over the next 6 months. You will be making payment on a shipment of imported goods (CAD100,000) in 6 months and want to hedge your currency exposure. The US risk-free rate is 5% and the Canada risk-free rate is 4% per year. The current spot rate is $1.25/CAD, and the 6-month forward rate is $1.3/CAD. You can also buy a 6-month option on Canadian dollars at the strike price of $1.4 /CAD for a premium of $0.10/CAD. If XYZ enters a forward contract today, the guaranteed dollar cost for this CAD obligation today (not in six months) should be $ [l1] . (please leave two decimal points for your answer. Example: 123.23)

  Questions are based on the following information: UA purchased an aircraft from Airbus and was billed €30 million payable in one year. UA is concerned with the USD costs from international sales and would like to control exchange risk. The current spot exchange rate is $1.05/€ and one-year forward exchange rate is $1.10/€ at the moment. UA can buy a one-year option on euro with a strike price of $1.12/€ for a premium of $0.02 per euro. Currently, the annual interest rate is 5% in the euro zone and 6% in the U.S.  

A British firm offers a French customer the choice of paying a £10,000 bill due in 90 days with either £10,000 or €12,500. The value of this free option is _______.

  Assume the six-month European put option has a striking price of $1.05/CAD. Assume the option premium is $0.03/CAD. If at the due date, the value of the Canadian dollar has decreased to $1.00, will the option be exercised or not? What is the net profit/loss of the seller of the option?