Question: using informaion from table Q3: Answer the following: (6 Marks) American Terms European Terms Bank Quotation Bid Ask British pounds 1971 1978 || 2071 |
Q3: Answer the following: (6 Marks) American Terms European Terms Bank Quotation Bid Ask British pounds 1971 1978 || 2071 | 2207 1.4740 4745 || 06733 Using the table above, what is the bid price of euro in terms of pounds (Bid cross rate of )? American Toms European Terms Rank Ootation Bid Ask British pounds 1975 || 250 || 1. SOTE 47451326 Using the table above, what is the ask price of euro in terms of pounds (Ask Cross rate of )? Q4: (7Marks) Suppose that the current spot exchange rate is 2.62/OMR and the one year forward exchange rate is 2.65/OMR. The one year interest rate is 6 in Euros and 5 in Oman. You can borrow OMR 1,000,000 or the equivalent in euro at the current spot exchange rate? Assume you are Omani based investor? A. Find Interest rate parity of /OMR B. Show how you can realize guaranteed profit from covered interest? C. How much the size of arbitrage profit in OMR
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