Reading 18: Currency Exchange Rates-LOS b, (Part 1)习题精选 percentage, interpret, currency, foreign, border

土豆妮

Session 4: Economics: Economics for Valuation
Reading 18: Currency Exchange Rates

LOS b, (Part 1): Calculate and interpret the spread on a foreign currency quotation.

 

 

 

A foreign currency is quoted at $1.5558 - 70. The percentage spread is closest to:

A) 0.07707%.

B) 0.00120%.

C) 0.07713%.

annyyu

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luqian55

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土豆妮

Today’s spot CAD bid exchange rate is 1.425 CAD/EUR and the ask exchange rate is 1.435 CAD/EUR. The percent spread is closest to:

A) 0.697%.

B) 0.702%.

C) 0.489%.

土豆妮

Today’s spot CAD bid exchange rate is 1.425 CAD/EUR and the ask exchange rate is 1.435 CAD/EUR. The percent spread is closest to:

A) 0.697%.

B) 0.702%.

C) 0.489%.

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The percentage spread is the same irrespective of how the quote is made. The percentage spread is calculated as: (1.435 ? 1.425) / 1.435 × 100 = 0.697%

土豆妮

Assume that the EUR:USD six-month forward exchange rate is quoted at 1.2102/1.2112. What is the bid-ask spread as a percentage of the ask price based on a direct quote for euros?

A) 0.0847%.

B) 0.0848%.

C) 0.0826%.

土豆妮

Assume that the EUR:USD six-month forward exchange rate is quoted at 1.2102/1.2112. What is the bid-ask spread as a percentage of the ask price based on a direct quote for euros?

A) 0.0847%.

B) 0.0848%.

C) 0.0826%.

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Our quote is in terms of the number of dollars per euro, and a direct quote for euros is the number of euros per dollar. So, we must invert the rates given to get USD:EUR = 0.8256/0.8263. The spread is the difference between the bid and the ask or 0.8263 ? 0.8256 = 0.0007. The spread as a percent of the ask price is (0.0007 / 0.8263) or 0.0847%. Rounding is per market convention.

土豆妮

A foreign currency is quoted at $1.5558 - 70. The percentage spread is closest to:

A) 0.07707%.

B) 0.00120%.

C) 0.07713%.

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Percent spread = [(Ask price – Bid price)/Ask price] × 100
Percent spread = [(1.5570 – 1.5558)/1.5570] × 100 = 0.07707%