Question 4 a. b. The Bank of England (BOE) which is the central of the UK announced th it would slow down the pace of increasing interest rate because there was sign that t labour market was slowing down. The market quote for GBP (with bid and ask) is: GBP 1.1954/1.1967 What would you do if you want to trade according to the news? State which currency you buy and which currency you sell. What is the rate you are going to deal at? (Show workings) You will need to pay a EUR bill for goods imported from Italy in 3 month You have USD and want to fix the exchange rate today by using forward. You get market quote (with bid and ask) of: Spot EUR/USD 3-month swap points 1.0655/1.0673 55.59 / 62.09 State which currency you buy and which currency you sell. What is the rate you are going to deal at? (Show workings)

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
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Question 4
a.
b.
The Bank of England (BOE) which is the central of the UK announced that
it would slow down the pace of increasing interest rate because there was sign that the
labour market was slowing down. The market quote for GBP (with bid and ask) is:
GBP 1.1954/1.1967
What would you do if you want to trade according to the news?
State which currency you buy and which currency you sell.
What is the rate you are going to deal at? (Show workings)
You will need to pay a EUR bill for goods imported from Italy in 3 months.
You have USD and want to fix the exchange rate today by using forward. You get a
market quote (with bid and ask) of:
Spot EUR/USD
3-month swap points
1.0655/1.0673
55.59 / 62.09
State which currency you buy and which currency you sell.
What is the rate you are going to deal at? (Show workings)
Transcribed Image Text:Question 4 a. b. The Bank of England (BOE) which is the central of the UK announced that it would slow down the pace of increasing interest rate because there was sign that the labour market was slowing down. The market quote for GBP (with bid and ask) is: GBP 1.1954/1.1967 What would you do if you want to trade according to the news? State which currency you buy and which currency you sell. What is the rate you are going to deal at? (Show workings) You will need to pay a EUR bill for goods imported from Italy in 3 months. You have USD and want to fix the exchange rate today by using forward. You get a market quote (with bid and ask) of: Spot EUR/USD 3-month swap points 1.0655/1.0673 55.59 / 62.09 State which currency you buy and which currency you sell. What is the rate you are going to deal at? (Show workings)
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