3. You have just graduated from the University of Andorra and are leaving on a whirlwind tour to see some friends. You wish to spend USD 1,000 each in Germany, New Zealand, and Great Britain (USD 3,000 in total). Your bank offers you the following bid-ask quotes: USD/EUR = 1.304 - 1.305, USD/NZD = 0.670 - 0.690 and USD/GBP = 1.90 - 1.95.
Required:
(a) If you accept these quotes, how many EUR, NZD, and GBP do you have at departure?
(b) If you return with EUR 300, NZD 1,000, and GBP 75, and the exchange rates are unchanged, how many USD do you have?
(c) Suppose that instead of selling your remaining EUR 300 once you return home, you want
to sell them in Great Britain. At the train station, you are offered GBP/EUR = 0.66 - 0.68,
while a bank three blocks from the station offers GBP/EUR = 0.665 - 0.675. At what rate
are you willing to sell your EUR 300? How many GBP will you receive?
Students succeed in their courses by connecting and communicating with an expert until they receive help on their questions
Consult our trusted tutors.
Login | Sign Up
