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Unformatted text preview: words, the cost of borrowing will be higher. Bid/ask Spread Utah Bank’s bid price for Canadian dollars is $.7938 and its asking price is $.81. What is the bid/ ask percentage spread? ask – bid / ask .81  .7938 = .0162 / .80= .02 * 100 = 2% (page 59). Indirect Exchange Rate If the direct exchange rate of the euro is worth $1.25, what is the indirect rate of the euro? That is, what is the value of a dollar in euros? 1/1.25 = .8 which means that .8 euros makes $1 (page 61). Cross Exchange Rate Assume Poland’s currency (the zloty) is worth $.17 and the Japanese yen is worth $.008. What is the cross rate of the zloty with respect to yen? That is, how many yen equal a zloty? YEN / Zolty .008 / .17 = .0588 .0588 yen equal a zloty (page 64). 4 3 6 10 11...
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This note was uploaded on 05/18/2010 for the course FIN 540 taught by Professor Dow during the Spring '10 term at Southeast University, China.
 Spring '10
 dow
 Exchange Rate, Investing

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