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Homework answers / question archive / Country AMERCIAN TERMS ($ / EUROPEAN TERMS ( / $ BID ASK BID ASK NZ$ 0

Country AMERCIAN TERMS ($ / EUROPEAN TERMS ( / $ BID ASK BID ASK NZ$ 0

Finance

Country

AMERCIAN TERMS ($ /

EUROPEAN TERMS ( / $

BID

ASK

BID

ASK

NZ$

0.4660

0.4667

   

SG$

0.5705

0.5710

   
  1. Compute the European terms for the currencies
  2. What is the BID cross exchange rate for SG$ priced in NZ$?
  3. What is the ASK cross exchange rate for SG$ priced in NZ$?
  4. Suppose an investor wanted to SELL 2000 NZ$ to $ &   SELL 1500 SG$ to $. How much is the total $ received at the end?
  5. Suppose an investor wanted to BUY 1000$ by selling SG$. How many SG$ does he need?

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Working : NZ $ : Bid = 1/0.4667 = 2.1427

NZ$ : Ask = 1/0.4660 = 2.1459

SG$ : Bid = 1 / 0.5710 = 1.7513

SG$ Ask = 1 / 0.5705 = 1.7528

Answer (b):

Cross Currency for SG$ priced in NZ$

BID = NZ$(1.7513*0.4660)/SG$ = NZ$0.8161/SG$

Answer (c):

Cross Currency for SG$ priced in NZ$

ASK = NZ$(1.7528*0.4667)/SG$ = NZ$0.8180/SG$

Answer (d):

Sell 2000 NZ$ to $ :

= 2000 * 0.4660

= $932

SELL 1500 SG$ to $ :

=1500 * 0.5705

= 855.75 or 856

Total $ Received = $932+$856 = $1788

Answer (e):

BUY 1000$ by selling SG$:

SG$ needed = 1000 / 0.5705 = 1752.85 or 1753 SG$

Alternative : 1000 * 1.7528 = 1752.8 or 1753 SG$

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