Question: Answer the following questions using the quotes below: Bid Ask Japanese yen vs U.S. dollar: JPY 144.195/USD JPY 144.216/USD Moldovian Leu vs Euro: EUR 0.05247/MDL

Answer the following questions using the quotes below:

	Bid	Ask
Japanese yen vs U.S. dollar:	JPY 144.195/USD	JPY 144.216/USD
Moldovian Leu vs Euro:	EUR 0.05247/MDL	EUR 0.05370/MDL

a. Compute the bid-ask spread (%) for both JPY-USD and EUR-MDL rates based on the quotes above.

b. Suppose Principal Financial Group wants to send USD 5,000,000 to its subsidiary office in Tokoyo, Japan. How many JPY would its subsidiary receive based on the quotes above?

c. Suppose L'Oreal receives a payment of MDL 15,000,000 from a customer in Moldova. How many EUR would L'Oreal receive based on the quotes above.

2. Suppose you have $1,000,000 to invest in the currency market and you observe the following FX quotes. Show how much triangular arbitrage profits you can make if you conduct a triangular arbitrage trade once.

		Quotes
Bank A:	Value of a US dollar (USD) in Myanmar kyat (MMK)	MMK 2,084.13/USD
Bank B:	Value of Myanmar kyat (MMK) in Philippine peso (PHP)	PHP 0.02832/MMK
Bank C:	Value of a Philippine peso (PHP) in US dollar (USD)	USD 0.01696/PHP

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