You are planning a trip to Europe and Japan and want to exchange US dollars for euros
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Question:
You are planning a trip to Europe and Japan and want to exchange US dollars for euros and yen. Your bank provides the following quotes:
Currency | Offer | Demand ---|---
Euros | 1.194 | 1.245
yen | 0.009245 | 0.00967
(a) What are the bank's relative bid-ask spreads for the two currencies?
(b) How much would you lose if you converted 500 dollars to euros and 500 to yen, respectively, and then converted them back to dollars?
(c) If you need to convert 1,000 euros into Japanese yen, how many yen would you get based on the quotes in the table?
Currency | Offer | Demand ---|---
Euros | 1.194 | 1.245
yen | 0.009245 | 0.00967
(a) What are the bank's relative bid-ask spreads for the two currencies?
(b) How much would you lose if you converted 500 dollars to euros and 500 to yen, respectively, and then converted them back to dollars?
(c) If you need to convert 1,000 euros into Japanese yen, how many yen would you get based on the quotes in the table?
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