A foreign exchange trader with a U$.$S$.$ bank took a short position of $5,000,000$ when the $$/$f exchange rate was $1\mathrm{.}55.$

Subsequently, the exchange rate has changed to $1\mathrm{.}61.$ Is this movement in the exchange rate good from the point of view of the position

taken by the trader? By how much has the bank's liability changed because of the change in exchange rate?

$5.$ Restate the following one$-,$ three$-,$ and six$-$month outright forward European term bid$-$ask quotes in forward points.

Spot

$1\mathrm{.}3431-1\mathrm{.}3436$

One$-$month

$1\mathrm{.}3432-1\mathrm{.}3442$

Three$-$month$1\mathrm{.}3448-1\mathrm{.}3463$

Six$-$month

$1\mathrm{.}3488-1\mathrm{.}3508$

$6.$ Using the spot and outright forward quotes in problem $4,$ determine the corresponding bid$-$ask spreads in points.