Question

PLEASE HELP!

1. A London dealer bank’s current bid/ask quotes for the U.S. dollar are £0.7720/$ and £0.7980/$. If you want to sell $12,000,000 to that dealer, how many dollars would you receive?                                                                                                                                                

2. A London dealer bank’s current bid/ask quotes for the U.S. dollar are £0.7720/$ and £0.7980/$. If you want to buy £16,000,000 from that dealer, how many British pounds would you pay?

3. How would the NY branch of the London dealer bank in the above question quote its bid and ask prices if it wants to be consistent with the prices of its parent bank?

(Show all your calculations and explain your work. All currency amount answers should be presented with two decimal places, all currency rates with the same number of decimals they are given, and all rates of change and premiums/discounts with four decimal places)

Answer 1

Golu tion London dea LCT Bann's guote is a) you an to el 12, ooo, 000 Bank 1 2, 000 ,000 S-9, 264,000 oo wilL rcceive ,264.00 pound s Cb) JOU vanb bo buy 16.000.000 Bank Rele vant γα bc Bid Yabe .