1. Suppose the euro is quoted at 0.6064-80 in London and the pound sterling is quoted at 1.6244-59 in Frankfurt.
a. Is there a profitable arbitrage situation? Describe it.
b. Compute the percentage bid-ask spreads on the pound and euro.
2. As a foreign exchange trader at Sumitomo Bank, you have a customer who would like spot and 30-day forward yen quotes on Australian dollars. Current market rates are
![2248_Table 3.jpg](https://secure.tutorsglobe.com/CMSImages/2248_Table%203.jpg)
a. What bid and ask yen cross rates would you quote on spot Australian dollars?
b. What outright yen cross rates would you quote on 30- day forward Australian dollars?
c. What is the forward premium or discount on buying 30-day Australian dollars against yen delivery?