Question 2 The following wholesale exchange rates are taken from Oanda.com on September 21, 2020. Currency Pair AUD/USD AUD/JPY AUD/CAD Bid Ask 0.7306 0.7307 76.25 76.32 0.9626 0.9634 AUD/NZD AUD/CHF 1.0781 1.0795 0.6648 0.6653 Note: The quotes above are in the base currency/quote currency format. For instance, AUD/USD indicates that AUD is the base currency and USD is the quote currency. The quotes indicate how much of the quote currency is needed for you to get one unit of the base currency. a) Create a table showing the bid and ask quotes of each of the following currency pairs: USD/CAD; JPY/CAD; JPY/NZD; CHF/JPY. b) If you were to buy JPY 100,000 on September 21, how many Australian dollars do you need for the purchase at the above rate? c) If you were to sell NZD 250,000 on September 21, how many Australian dollars will you receive using the rate given above?
Question 2 The following wholesale exchange rates are taken from Oanda.com on September 21, 2020. Currency Pair AUD/USD AUD/JPY AUD/CAD Bid Ask 0.7306 0.7307 76.25 76.32 0.9626 0.9634 AUD/NZD AUD/CHF 1.0781 1.0795 0.6648 0.6653 Note: The quotes above are in the base currency/quote currency format. For instance, AUD/USD indicates that AUD is the base currency and USD is the quote currency. The quotes indicate how much of the quote currency is needed for you to get one unit of the base currency. a) Create a table showing the bid and ask quotes of each of the following currency pairs: USD/CAD; JPY/CAD; JPY/NZD; CHF/JPY. b) If you were to buy JPY 100,000 on September 21, how many Australian dollars do you need for the purchase at the above rate? c) If you were to sell NZD 250,000 on September 21, how many Australian dollars will you receive using the rate given above?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Question 2
The following wholesale exchange rates are taken from Oanda.com on September 21, 2020.
Currency Pair
AUD/USD
Bid
Ask
0.7306
0.7307
AUD/JPY
AUD/CAD
AUD/NZD
AUD/CHF
76.25
76.32
0.9626
0.9634
1.0781
1.0795
0.6648
0.6653
Note: The quotes above are in the base currency/quote currency format. For instance,
AUD/USD indicates that AUD is the base currency and USD is the quote
currency. The quotes indicate how much of the quote currency is needed for you to get one
unit of the base currency.
a) Create a table showing the bid and ask quotes of each of the following currency pairs:
USD/CAD; JPY/CAD; JPY/NZD; CHF/JPY.
b) If you were to buy JPY 100,000 on September 21, how many Australian dollars do you
need for the purchase at the above rate?
c) If you were to sell NZD 250,000 on September 21, how many Australian dollars will you
receive using the rate given above?
The forward quotes in point form are as follows for the currency pairs AUD/USD and
AUD/CHF as of September 21, 2020.
1-year forward
points
Bid
Currency
1-month forward
3-month forward
Pair
points
points
Bid
Ask
Bid
Ask
Ask
AUD/USD
AUD/CHF
0.6000
0.7000
2.000
2.3000
4.000
5.5000
-6.4000
-6.2400
-16.9000
-16.5200
-70.5000
-68.5000
d) Calculate the outright forward rates for the currency pair AUD/CHF.
e) Calculate the outright forward rates for the currency pair AUD/USD.
f) Calculate the forward premium (discount) based on the rates calculated in e) above.
g) Do the forward rates imply a strengthening or weakening of the USD with respect to the
Australian dollar? Explain your logic.
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