The bid/ask quotes for a foreign currency traded in Kenya in the month of November 2021...

  

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The bid/ask quotes for a foreign currency traded in Kenya in the month of November 2021 was: Bid = Ksh. 70.40 and Ask = Ksh. 76.80. Required:- (i) Calculate the mean exchange rate in Ksh. (ii) Compute the Bid/Ask spread (iii) Comment on significance of the Bid/Ask spread (i) Assume the following spot rates in Germany, France and USA: DM = $0.90; FF = $0.30; and DM = FF4 The amount involved is $1,800,000. Required:- Determine whether a triangular arbitrage exists. (ii) Determining the nominal interest rate on one-year T-Bills, given an expected 10.4% inflation rate over one year and that investor's require a real return of 5.6% over one year. The bid/ask quotes for a foreign currency traded in Kenya in the month of November 2021 was: Bid = Ksh. 70.40 and Ask = Ksh. 76.80. Required:- (i) Calculate the mean exchange rate in Ksh. (ii) Compute the Bid/Ask spread (iii) Comment on significance of the Bid/Ask spread (i) Assume the following spot rates in Germany, France and USA: DM = $0.90; FF = $0.30; and DM = FF4 The amount involved is $1,800,000. Required:- Determine whether a triangular arbitrage exists. (ii) Determining the nominal interest rate on one-year T-Bills, given an expected 10.4% inflation rate over one year and that investor's require a real return of 5.6% over one year.

Answer rating: 100% (QA)

Answer i Mean Exchange Rate To calculate the mean exchange rate we can average the Bid and Ask rates ... View the full answer