Citigroup quotes Danish kroner as ‘‘DKK5.62/$ Bid and DKK5.87/$ Ask.''
a. Which currency is Citigroup buying at the DKK5.62/$ bid rate, and which currency is Citigroup selling at the DKK5.87/$ offer rate?
b. What are the bid and ask prices in American terms? Which currency is Citigroup buying at these prices and which currency is Citigroup selling?
c. With the foreign currency in the numerator, the ‘‘DKK5.62/$ Bid and DKK5.87/$ Ask'' quotes are indirect quotes for a U.S. resident. What are the bid and ask prices in direct terms for a U.S. resident? At these prices, which currency is Citigroup buying and which currency is it selling?
d. If you sell $1 million to Citigroup at a bid price of DKK5.62/$ and simultaneously buy $1 million at their offer price of DKK5.87/$, how many Danish krona (‘‘krona'' is the plural of kroner) will you make or lose? What is Citigroup's kroner profit or loss on the transaction?