The data for Study Problems are given in the following table:
COUNTRY CONTRACT $/FOREIGN CURRENCY
Canada-dollar Spot .8437
30-day .8417
90-day .8395
Japan-yen Spot .004684
30-day .004717
90-day .004781
Switzerland-franc Spot .5139
30-day .5169
90-day .5315
Question 1: (Spot exchange rates)
An American business needs to pay (a) 10,000 Canadian dollars, (b) 2 million yen, and (c) 50,000 Swiss francs to businesses abroad. What are the dollar payments to the respective countries?
Question 2: (Spot exchange rates)
An American business pays $10,000, $15,000, and $20,000 to suppliers in, respectively, Japan, Switzerland, and Canada. How much, in local currencies, do the suppliers receive?
Question 3: (Indirect quotes)
Compute the indirect quote for the spot and forward Canadian dollar, yen, and Swiss franc contracts.
Question 4: (Exchange rates)
The spreads on the contracts as a percentage of the asked rates are 2 percent for yen, 3 percent for Canadian dollars, and 5 percent for Swiss francs. Show, in a table similar to the preceding one, the bid rates for the different spot and forward rates.