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Calculate the profit or loss you make by selling AUD

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Reference no: EM133034957

Question - (a) Suppose at 9.30am you call a foreign exchange dealer and ask for a quote on FJD/AUD exchange rate. The dealer responds by quoting 1.5500-1.5900. You decide to buy AUD1,000 at the quoted rate. At 3.30pm the same day, the dealer quotes 1.5545-1.5585. Calculate the profit or loss you make by selling AUD at 3.30pm? What will be your amount of profit or loss?

(b) The exchange rate between Fiji dollar and VUV (Ni-Vanuatu vatu) is (VUV/FJD) currently 52.400-53.500. You decide to take a speculative position on FJD, and this position is squared two months later when the exchange rate is ( / ) = 51.400 - 52.500.

(i) Is taking short position on FJD profitable?

(ii) Calculate the gain or loss by taking a short position on FJD1000, given the bid-offer rates of the two periods.

Reference no: EM133034957

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