Question

a) Indirect dollar quotes for yen and pound are 100.2468-3579 and 1.3579-654, respectively. What is the indirect yen for pound cross rate?

b) Direct euro quotes for pound and Swiss franc are 1.2468-579 and 0.9876-13. What is the direct franc for pound cross rate?

c) Dollar is priced at 100.2468-3579 in Tokyo. Pound is priced at 1.1111-357 in New York. What is the direct yen for pound cross rate?

d) Euro is priced at 64.5982-7829 in Moscow. Pound is priced at 1.2468-579 in Frankfurt. What direct pound for ruble cross rate?

Answer 1

a.given $

Yen 100.2468-3579

Pound 1.3579-654

The quote is indirect when the price of one unit of domestic currency is expressed in terms of Foreign currency.

i.e,

1 $ = 100.2468 - 3579 Yen

1 = 1.3579 - 654 $

Indirect Yen for Pound

Pound Per Yen to be calculated

Pound per Yen = (Pound / Yen ) bid Rate - (Pound / Yen ) Ask Rate

=  [(Pound / Dollar )*(Dollar/Yen)] Bid Rate - [(Pound / Dollar )* (Dollar / Yen )]Ask Rate

= (1/1.3654 )* (1/1.3579 ) - (1/3579 )* (1/100.2648)

= 0.007298 - 0.007346

b.GIven

Euro per pound = 1.2468 - 1.2579

Euro per frank = 0.9876 - 0.9889

So Franc per Pound = [(Franc/ Euro )*(Euro/Pound)] bid rate - [(Franc/ Euro*Euro/Pound)]Askrate

= 1/0.9889*1.2468 - 1/0.9876*1.2579

= 1.2608 - 1.2737

c.

Yen per Dollar =  100.2468- 100.3579

Dollar per Pound = 1.1111 - 1.1357

Yen for pound = [(Yen/ Dollar )*(Dollar/Pound)] bid rate - [(Yen/ Dollar )*(Dollar/Pound)]Ask Rate

= 100.2468*1.1111 - 100.3579*1.1357

= 111.3842 - 113.9764

d.

Ruble Per Euro = 64.5982 - 64.7829

Euro per Pound =  1.2468 - 1.2579

Pound per Ruble =  [(Pound/ Euro )*(Euro/Ruble] bid rate - [(Pound/ Euro )*(Euro/Ruble]Ask Rate

= 1/1.2579*1/64.7829 - 1/2468*1/64.5982

= 0.01227 - 0.01242