A New Zealand company needs to make a payment of 600,000 Thai Baht (THB). To do this it needs to convert New Zealand dollars (NZD) to THB and it has received the following exchange rate quotes from a dealer: Exchange rate Bid Ask THB/USD 34.52 35.01 NZD/USD 1.5940 1.6025 What is the amount that the company will need to pay in NZD to purchase the required THB? and what is the percentage bid-ask spread for the two-sided THB/USD?
A New Zealand company needs to make a payment of 600,000 Thai Baht (THB). To do this it needs to convert New Zealand dollars (NZD) to THB and it has received the following exchange rate quotes from a dealer: Exchange rate Bid Ask THB/USD 34.52 35.01 NZD/USD 1.5940 1.6025 What is the amount that the company will need to pay in NZD to purchase the required THB? and what is the percentage bid-ask spread for the two-sided THB/USD?
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 34QA
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A New Zealand company needs to make a payment of 600,000 Thai Baht (THB). To do this it needs to convert New Zealand dollars (NZD) to THB and it has received the following exchange rate quotes from a dealer:
Exchange rate | Bid | Ask |
THB/USD | 34.52 | 35.01 |
NZD/USD | 1.5940 | 1.6025 |
What is the amount that the company will need to pay in NZD to purchase the required THB?
and what is the percentage bid-ask spread for the two-sided THB/USD?
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