Question

INTERNATIONAL FINANCE- PLEASE SHOW ALL WORK SO I CAN UNDERSTAND THE STEPS!!!!

1. A. Bid and Ask quotes for the Euro (EUR) and Canadian Dollar (CAD) are given    below:

          USD 0.7527 – 0.7570/CAD

          USD 1.1712 – 1.1731/ EUR

          Calculate the bid and ask cross rates: S (EUR/bid CAD) and S (EUR/ask CAD).

2. The EUR went from EUR 0.8540 per USD to EUR 0.8296 per USD in a month.

A)What was the appreciation (or depreciation) of the EUR relative to the USD over the month? (Hint: % change in the dollar value of the EUR)

B) What was the appreciation (or depreciation) of the USD relative to the EUR over the month?

C)Suppose the current exchange for the EUR is USD 1.1825 per EUR. You forecast the USD is going to depreciate by 20% relative to the EUR in one month. What will be the USD/EUR exchange rate in a month?

Answer 1