Question

Suppose that your bank quotes Norwegian krone NOK8.1698/$ bid and NOK8.1748/$ ask. You sold $10 million at bid price to your bank. However, you changed your mind and sold your kroner (plural of krone is "kroner") back to the bank. What is your gain/loss in USD? What is bank's gain/loss in NOK?

Answer 1

**Direct quote for Krone :

Bid price = 1/8.1748 = Krone .12233 per $

Ask price = 1/ 8.1698 =Krone .12240 per $

Amount received in Krone against $ 10 million = 8.1698*10,00,000 = Krone 81,698,000

Amount received in $ against krone = 81,698,000 * .12233 = $ 9,994,116.34

Amount of profit /(loss) in USD =Amount received in $ - Amount invested

                = 9,994,116.34 - 10,000,000

               = $ - 5,883.66 loss

2)Amount of loss in Krone = Amount of loss in $ * Bid price in krone

                          = -5883.66* .12233 = Krone - 719.75