Problem 1 (2 points):

a) (0.5 point) Suppose the exchange rate of USD/CHF = 0.91 0.95. If you were to buy 10,000,000 CHF worth of USD and then sell them five minutes later, how much of your 10,000,000 CHF would be "eaten" by the bid-ask spread?

b) (0.5 point) The value of the THB today is $0.03. Yesterday, the value of the THB was $0.03. What is the percentage of depreciation/appreciation of the value of the THB? c) (1 point) If the Canadian dollar devalues against the Japanese yen by 25%, the JPY will appreciate against the CAD by how many percentage?

Problem 2 (2 points): Choose any three currencies (i.e. A, B and C) and search on Google for 2 (out of 3) exchange rates (i.e. A/B and B/C) and calculate the third one (cross rate of A/C). Rounding the result at four decimal places.

Note: Take a screenshot of your searched exchange rate and paste in your answer sheet. Donot use a group of all these 3 currencies EUR, USD, GBP. Tip: You can search A B reuters on Google. The Reuters website (https://www.reuters.com) will give you bid ask rate of A/B. For example: https://www.reuters.com/quote/CHFUSD.

Problem 3 (2 points): Using your 3 exchange rates in previous question. Assume another market cross rate of A/C to have triangular arbitrage opportunity. Calculate your profit if you invest 1 million currency A.

Problem 4 (2 points):: The U.S. government removed quota imposed on goods imported from Vietnam. How does it affect exchange rates between USD and VND on the foreign exchange market (FX)? The central bank of Vietnam (SBV) would like to maintain the previous rate. What actions should they do?