Identify and define the bid and offer and the trader\'s profit. Calculate the sp

Question

Identify and define the bid and offer and the trader's profit. Calculate the spread for the following 1. Exchanging US dollars for British pounds (3 pts.): $1.4723 /45 2. Exchanging US dollars for dollars Canadian (3 pts.): .8523/31 Indicate which of the following are Direct Quotes (American Terms) (1 pt each) 3, ¥105.:$1 4· SLe.83 5S1S21 Calculate PPP (purchasing power parity) implied exchange rate based on the following Big Mac 6. Germany 2.39 ¥10SS1 US $ 1.49 Assume actual exchange rate of 1 32/S1 Calculate whether the curo is overvalued or undervalucd and by how much for the problem above (4 pts) 7. (over) Print LayoutView, I Soc 1, Pages:-1 of 2 : Words: 42of 177

Explanation / Answer

Solution for Question 1

Bid Price = $1.4723 per pound

Offer piece = $1.4745 per pound

Spread = $1.4745 - $1.4723

            = $0.0022 per pound.

The spread between bid price and offer price is the trader profit.

Solution for Question 2

Bid Price = $0.8523 per Canadian Dollar

Offer piece = $0.8531 per Canadian Dollar

Spread = $0.8531- $0.8523

            = $0.000.9 per Canadian Dollar.

The spread between bid price and offer price is the trader profit.

Solution for Question 3

¥105:$1 = direct Quote

Solution for Question 4

#1:€0.83 = Indirect Quote

Solution for Question 5

$1.52:€1 = Direct Quote.

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