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Assume the quotes indicated below are from a dealer in the NY currency market.
Forward prices are quoted as the absolute forward premium or discount (not percentage) in basis points (one basis point = .0001).
Forward exchange rates
1a. If the dealer’s spot market quotes for the euro (€) are 1.0732 1.0734, and the dealer’s 6-month forward quotes for the euro are: 99 100, what are the dealer’s effective 6-month forward bid and ask prices for the euro?
b. If a customer were to enter a forward contract with this dealer to sell $1m to obtain euros, how many euros would the customer receive in 6 months?
2a. If the dealer’s spot market quotes for the New Zealand dollar (NZ$) are: 0.7209 0.7212, and the dealer’s 1-year forward quotes for the New Zealand dollar are: -77 -70, what are the dealer’s effective 1-year forward bid and ask prices for the New Zealand dollar?
b. If a customer were to enter a forward contract with this dealer to sell NZ$1m to obtain US dollars, how many US dollars would the customer receive in one year?
3a. If the dealer’s spot market quotes for the Swiss framc are 0.9994 0.9996, and the dealer’s 3-month forward quotes for the franc are: -55 -54, what are the dealer’s effective 3-month forward bid and ask prices for the Swiss franc?
b. If a customer were to enter a forward contract with this dealer to sell $1m to obtain Swiss francs, how many francs would the customer receive in 3 months?
4a. If the dealer’s spot market quotes for the Brazilian real are: 3.1676 3.1706, and the dealer’s 9-month forward quotes for the real are: 192 201, what are the dealer’s effective 9-month forward bid and ask prices for the Brazilian real?
b. If a customer were to enter a 9-month forward contract with this dealer to sell R$1m to obtain US dollars, how many US dollars would the customer receive in 9 months?
5. If forward prices are used as an indicator of the likely increase or decrease in value of a currency, which of the foreign currencies above are expected to increase in value over the indicated time period, and which are expected to decrease in value?

 
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