Answer question seven

Questions One, Two, Three, Four, Five, and Six are already answered but are needed to be able to answer question seven. Before answering seven please double-check that I got the correct answers to One, Two, Three, Four, Five, and Six thank you.

Info

The following are quotes for Japanese (JPY) against the dollar (USD) for spot, 1 month forward, 3 months forward, 6 months forward and one year forward. All the rates are quoted as the number of JPY per USD. Spot exchange rate:

Bid rate 128.02 JPY per USD Ask rate 128.06 JPY per USD

Forward points: 1 month forward 12 - 09 3 month forward 46 - 41 6 month forward 102 - 92 1 year forward 204 - 184

Questions One, Two, Three, Four, Five, and Six

Q 1 & Q 2 combined: A customer TBI International inc calls you and ask you for the exchange rate at which they can sell to you 500 mio JPY for delivery 3 months forward.

Q 1: What exchange rate do you quote? Give your answer to 2 decimal places.

answer = 128.08 JPY

Q 2: How many USD will the customer TBI International inc receive in 3 months time in exchange for the 500 mio JPY. Give your answer to the nearest USD.

answer = $3,903,810

Q 3 & Q 4 combined (this continues on from all the information in Q 1): A different customer, Wallaby Exports, calls you and ask you for the exchange rate at which they can sell to you 2 mio USD for delivery 6 months forward.

Q 3: What exchange rate do you quote? Give your answer to 2 decimal places.

answer = 230.02 JPY

Q 4: How many JPY will the customer, Wallaby Exports, receive in 6 months time in exchange for the 2 mio USD. Give your answer to the nearest JPY.

answer = 460,040,000 JPY

Q 5 & Q 6 combined (this continues on from all the information in Q 1): A trader at a different bank calls you up and asks you for a two way (bid and ask rate) for an outright forward

Q 5: What bid rate do you give?

answer = 128.43

Q 6: What ask rate do you give?

answer = 128.52

question seven:

Q 7 (this continues on from all the information in Q 1 and Q 2 and, in fact, Q 3 to Q 6):

Based on the information in this question, do you think (pick the most appropriate choice):

A./ Japanese interest-rates are higher than US interest-rates. B./ Japanese interest-rates are lower than US interest-rates. C./ Japanese interest-rates and US interest-rates are the same. D./ I don't know the answer. Oliver the Finance Pug knows the answer but he is fast asleep after a long lunch and I do not want to wake him. E./ Oliver the Finance Pug has never been to Japan so even he does not know the answer.