2.1) Explain the different characteristics of organised markets and over-the-counter markets within the Forex markets and...

 

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2.1) Explain the different characteristics of organised markets and over-the-counter markets within the Forex markets and specify which types of exchange rate transactions they deal with. [40%] 2.2) Joanne Ferrari, a foreign exchange trader at JPMorgan Chase, can invest $8 million, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with Denmark. Using the following quotes can Joanne make a covered interest arbitrage (CIA) profit? Spot exchange rate: Three-month forward rate: Three-month dollar interest: Three-month krone interest: kr 6.1720/$ kr 6.1980/$ 3.0% per year 4.5.0% per year In your answer please use also the Arbitrage Rule of Thumb. 2.3) Suppose the following quotations by a bank: [40%] /$ = 0.8035 - 0.8050 /$125.002 -125.113 What are the bid-ask prices of the yen in euro or /\ ? Please consider up to six decimal points in your answer. [20%] 2.1) Explain the different characteristics of organised markets and over-the-counter markets within the Forex markets and specify which types of exchange rate transactions they deal with. [40%] 2.2) Joanne Ferrari, a foreign exchange trader at JPMorgan Chase, can invest $8 million, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with Denmark. Using the following quotes can Joanne make a covered interest arbitrage (CIA) profit? Spot exchange rate: Three-month forward rate: Three-month dollar interest: Three-month krone interest: kr 6.1720/$ kr 6.1980/$ 3.0% per year 4.5.0% per year In your answer please use also the Arbitrage Rule of Thumb. 2.3) Suppose the following quotations by a bank: [40%] /$ = 0.8035 - 0.8050 /$125.002 -125.113 What are the bid-ask prices of the yen in euro or /\ ? Please consider up to six decimal points in your answer. [20%]