The computer screen in a foreign exchange trading room shows the following:
The computer screen in a foreign exchange trading room shows the following:
Currency Spot 1-month 3 -month 6-month
Currency type spot transaction (spot price) 1-month forward transaction (futures price) 3 months 6 months
Mexican peso Mexican peso
p>South African rand South African rand
Pound Sterling Pound
a. What are the outright bid and ask quotations
Spot buying and selling prices What are the prices?
low price price is outright bid quotation, high spot is outright ask quotation. i.e SFR outright ask price is 6.1300 and outright bid price is 6.1200
High spot is the buying price, low price is Selling price, for example: SFR's cash buying price is 6.1200 and cash selling price is 6.1300
b. As a customer, you want to buy Mexican peso three-month forward with pound sterling. what is your effective exchange rate?
As a customer, you want to buy 3-month forward Mexican pesos with British pounds. What is the actual exchange rate?
I don’t know how to calculate this. It may be the selling price of the spot purchase price of pounds × the peso March futures price: 1.6320*9.3210