26 Jun WHAT IS THE DIRECT SPOT QUOTE FOR THE PESO IN TORONTO?
Spot Exchange Rates — Problems
Fin 310
1. C$ 1 = $0.842 and €1 = $1.323. What is C$/€?
2. Suppose the direct quote for sterling in New York is 1.1115 – 54. What is the direct quote for dollars in London?
3. Suppose the spot quote on the Mexican Peso is $0.1332 – 47 and the spot quote on the Canadian Dollar is $0.8182 – 94.
a. What is the direct spot quote for the Peso in Toronto?
b. Compute the percentage bid-ask spread on the Peso and Can. Dollar.
4. Suppose you observe the following direct spot quotations in New York and Toronto, respectively: 0.8000 – 50 and 1.2500 – 60. What are the arbitrage profits per $1 million?
5. Suppose the SF is quoted at 0.4442 – 86 in London and the pound sterling is quoted at 2.2523 – 42 in Bern.
a. Is there a profitable arbitrage situation? Describe it.
b. Compute the percentage bid-ask spreads on the pound and SF.
6. Assuming no transaction costs. Suppose £1 = $1.9411 in New York, $1 = €0.8756 in Paris and €1 = £0.6588 in London. How could you take profitable advantage of these rates?
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