Canadian Dollar: Spot and Forward (C$/$) Euro: Spot and forward ($/€) Mid rates Bid Ask Mid rates Bid Ask spot 1.2645 1.2639 1.2651 1.2390 1.2387 1.2393 Forward 3-week 23 27 19 15 3-month 135 128 155 146 7a. How much $100 will cost you in Canadian Dollar and Euro? (Hint: you are buying USD). 7b. What are 3-week and 3-month forward bid and ask rate for Canadian Dollar and Euro? 7c. Based on information above, what are the profit margin for the traders between Canadian Dollar and Euro? (Hint: the bid-offer spread % is the profit margin for dealers; you need to find the cross bid-offer rate between Canadian Dollar and Euro; use American Terms to show cross-rate)
Added by Lindsey H.
Step 1
To buy $100, we need to convert it to Canadian Dollar and Euro using the spot rates: - $100 = C$126.45 (using the ask rate of 1.2645) - $100 = €80.11 (using the bid rate of 1.2390) So, $100 will cost C$126.45 in Canadian Dollar and €80.11 in Euro. 7b. Show more…
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