Q .1. An Indian currency trader receives following currency quotes: Rs 28.5000/Singapore $ in Mumbai 48.

3610/US $ in Mumbai He checks rates at Singapore and he receives the rate as Singapore $ 1.7470/US$. Assuming there are no transaction costs, how will the trader use this set of information for making profit?

Q.2. The following are the various quotes for the US $ available in a bank in Mumbai. Spot Rs 61.9350/61.99550 1 month forward 225/275 3 month forward 400/650

Find the bid and ask rates and spread for all the quotes. Solution
MATURITY SPOT 1 MONTH FORWARD 3 MONTH FORWARD BID 61.9350 61.9575 61.9750 ASK 61.9550 61.9825 62.0200 SPREAD 0.0200 0.0250 0.0450

Q.3. Am Indian importer receives the following quotes of dollar from its banker. Spot 1 month forward 6 month forward : Rs 48.8750 : Rs 48.9300 : Rs 49.1050

What is the discount/premium of the dollar forward prices? Q.4. (A) The following is a direct quote of the dollar provided by a leading Indian Bank. Spot Rs 47.6500/47.6595 1 month forward 25/20 3 month forward 40/32 6 month forward 20/26

What is the bid-ask rates for these quotes?

Q.4.(B) If you asre a small forex dealer and are required to provide forward rates for 2 months to a client, what forward bid-ask rate will you quote on the basis of rates provided in RQ 4.(a)?

Q .5. From the following data, at what forward rate will no arbitrage gain possible: Rs 48.00/$(Spot) 6 month in interest rate: India US : 7.5% per annum : 2.0% per annum