FIN542 – INTERNATIONAL FINANCIAL MANAGEMENT

TOPIC:
(BID, ASK QUOTATION / CROSS RATE / SPREAD / ANNUALIZED)

QUESTION 1 – TEST 1 (OCT 2018) QUESTION 3

The following table shows current exchange rates between the Hong Kong Dollar (HKD),
Korean Won (KRW) and the Malaysian Ringgit (RM).
Maturity Value of 1000KRW in HKD Value of RM in HKD
Spot 7.0000/10 1.8900/20
1-month 20-30 10-20
3-month 40-20 40-20

i. Determine how many KRW would you pay to buy HKD70,000 today.
KRW10,000,000 @ KRW9,999,999.70

ii. Compute how many Hong Kong Dollars would receive if you sell RM100,000 for
delivery in 30 days.
HKD189,100

iii. Determine how many Ringgits can you purchase for delivery in 3-month with one
million Hong Kong dollars.
RM529,100.5291 @ RM529,100

iv. Compute the bank’s percentage spread on the spot 1000KRW in RM quotation.
0.1188%

v. If you need to pay RM50,000 in one month’s to the bank, determine how much
would that be in KRW?
KRW13,524,705 @ KRW13,524,707.23

vi. If the interest rate for Hong Kong and Malaysia are 3.0 percent and 3.4 percent per
annum respectively, compute the six-month forward bid discount or premium
annualized for HKD in RM.
-0.4163%
QUESTION 2 – TEST 1 (MAY 2018) QUESTION 3
CIMC Bank quoted the following exchange rate for spot, one-month, two-month and
three-month exchange rate as follows:
1-month 2-month 3-month
Spot Rate
forward forward forward
1 Singapore
RM2.9689/97 20/70 60/50 35/46
Dollar (S$)
100 Japanese
RM3.6220/32 27/65 32/70 41/34
Yen (¥)
1 Australian
RM2.9926/42 48/36 64/53 76/68
Dollar (AUD)

i. If the customer needs 30,000 Ringgit today, how much is that in S$?
S$10,104.75

ii. If you are to receive S$50,000 in 90 days, how much is it pay in RM?
RM148,620

iii. If a customer wishes to buy ¥200,000 in 2 month’s forward, how much he must
pay in RM?
RM7,260.40

iv. If the bank needs to pay RM60,000 in 3 month’s forward to a customer for a
foreign currency transaction, how much would that be in AUD?
AUD20,084.35

v. Compute the annualized premium on the 60 days offer rate RM/¥.

1.1591%

vi. Compute the bank’s percentage spread on the spot AUD in S$ quotation.
0.0694%
QUESTION 3 – TEST 1 (NOV 2017) QUESTION 3
Bank of America quotes the following exchange rates for Euro dollar and Brunei dollar
respectively:
Maturity Value of US dollar (USD) in Value of US dollar (USD)
Euro (€) in Brunei dollar (BND)
Spot 0.8500-27 1.3600/18
30-day forward 25-53 45/25
60-day forward 63-32 23/42

i. Determine the 30-day forward bid-ask percentage spread for both spot exchange
rate.
EUR/USD = 0.6410%
BND/USD = 0.2796%

ii. Determine the 60-day forward premium or discount for both spot exchange rate.
EUR/USD → BID = -0.0063 (Discount) ASK = -0.0032 (Discount)
BND/USD → BID = 0.0023 (Premium) ASK = 0.0042 (Premium)

iii. If the 3-month offer rates for US dollar, Euro dollar and Brunei dollar are 3.8
percent, 2.5 percent and 4.2 percent per annum respectively, compute the 3-
month annualized forward discount or premium for both exchange rates.
ANNUALIZED EUR/USD = -1.3135%
ANNUALIZED BND/USD = 0.40%

iv. Calculate the cross rate of Euro dollar and Brunei dollar for delivery of 1 month
and 2 months forward.
BND/EUR
1-month → BID = 1.5798 ASK = 1.5945
2-month → BID = 1.6036 ASK = 1.6191

v. How much Euro dollar will the Bank of America gets for BND10,00,000 for
delivery of 30-day forward?
EUR6,271,558.48
QUESTION 4 – TEST 1 (MAY 2016) QUESTION 3
As a banker at an Oisee Bank, you are given the following quotations:
1-month 2-month
Exchange Rate Spot Rate
forward forward
100 Indian Rupee (100INR) RM5.5000/10 20/40 60/50
100 Japanese Yen (100¥) RM3.6000/10 20/60 30/40
Thai Bath (THB) RM8.9000/10 40/30 60/50

Country Rate (percent)

India 8
Japan 4
Malaysia 5
Thailand 6

i. If the bank’s customer need THB10,000, how many RM would he exchange today?
RM89,010

ii. If you are expected to receive INR50,000 in 1 months’ time, how much is it pay in
RM?
RM2,752.50

iii. If the bank’s customer wishes to sell ¥200,000 in 2 months’ time, how much he
will receive in RM?
RM7,206

iv. What is the annualized premium or discount on the 2-month forward bid RM per
¥ rate?
0.50%

v. What is the bid-ask price and percentage spread of INR per THB in 60 days?
BID = 161.8268
ASK = 161.9221
% SPREAD = 0.0589%

vi. What is the bid-offer price and percentage spread of INR in ¥ in 90 days?
BID = 1.5121
ASK = 1.5124
% SPREAD = 0.01984%

vii. If you need to pay ¥100,000 in 3 months’ time for a foreign currency transaction,
how much would that be in INR?
INR66,120.07
QUESTION 5 – TEST 1 (OCT 2015) QUESTION 4
As a foreign exchange trader at a Citibank, you are given the following quotations:
1-month 2-month
Exchange Rate Spot Rate
forward forward
1 Singapore Dollar (S$) RM3.0500/10 20/70 60/50
100 Japanese Yen (100¥) RM3.5000/30 25/65 35/70
1 Australian Dollar (AUD) RM3.1010/40 45/35 65/55

Country Rate
Malaysia 15%
3-Month interest rate
Japan 10%
Singapore 20%

Calculate:
i. If the bank’s customer needs S$5,000 today, how much is that in RM?
RM15,255

ii. If you as a foreign exchange trader are expected to receive S$5,000 in 1 months’
time, how much is it pay in RM?
RM15,290

iii. If the bank’s customer wishes to buy ¥200,000 in 2 months’ time, how much he
must pay in RM?
RM7,020

iv. What is the bank’s annualized premium or discount on the 2-month offer forward
RM per ¥ rate?
1.199%

v. What is the bank’s bid-ask price and percentage spread of S$ per AUD in 60 days?
BID = 1.0159
ASK = 1.0179
% SPREAD = 0.1965%

vi. What is the bank’s bid-offer price and percentage spread of AUD in S$ in 90 days?
BID = 1.0035
ASK = 1.0048
% SPREAD = 0.1295%

vii. If the bank needs to pay S$10,000 on 3 months’ time to a customer for foreign
currency transaction, how much would that be in AUD?
AUD9,952.23
QUESTION 6 – DEC 2019 (QUESTION 2(b))
Below are the Kuala Lumpur market quotation of spot, 1-month and 3-month rate for
MYR/BND and MYR/CAD.
Spot MYR2.9380/2.9870/BND MYR3.0490/3.0950/CAD
1-month forward 30/40 65/50
Interest rate Malaysia Brunei Canada
Three months 2% 1.2% 2.6%

Calculate the:
i. 3-month forward outright rates for the BND and CAD quotations.
RM/BND
BID = RM2.9439
ASK = RM2.9930

RM/CAD
BID = RM3.0444
ASK = RM3.0904

ii. Spot percentage bid-ask spread for MYR/BND and MYR/CAD.

RM/BND → 1.64%
RM/CAD → 1.49%

iii. Annualized bid offer 1-month forward percentage for MYR/BND and MYR/CAD.
MYR/BND
BID = 1.23%
ASK = 1.61%

MYR/CAD
BID = -2.56%
ASK = -1.94%

iv. The amount paid to buy CAD580,000 delivery in 3-months’ time

RM1,792,432

v. Spot cross rate of BND per unit of CAD.

BID = BND1.0208
ASK = BND1.0534
QUESTION 7 – JUN 2019 (QUESTION 2(b))
ABC Bank has the following quotations for the US Dollar and Indonesia Rupiah.
Per unit USD 100 units IDR
Spot MYR4.1500/4.1548 MYR0.0470/0.0520
One month forward 20/76 90/50
Three months forward 62/25 10/22

i. Calculate the forward outright bid and offer rates for the above quotations.
PER UNIT USD
SPOT → BID = 4.1520 ASK = 4.1624
3-Month → BID = 4.1438 ASK = 4.1523

100 UNITS IDR

SPOT → BID = 0.0380 ASK = 0.0470
3-Month → BID = 0.0480 ASK = 0.0542

ii. Determine the amount in MYR you would exchange with IDR700,000 today.
MYR329

iii. Determine the annualized premium (discount) on the three months forward bid
rates for MYR/USD and MYR/IDR100.
USD = -0.5976%
IDR = 98.51064%

iv. Compute the percentage bid-offer spread on the MYR/USD and MYR/IDR100 spot
rates.
USD = 0.1155%
IDR = 9.6154%

v. Determine the one month forward cross rate for IDR/USD.

BID = IDR8,834.0426
ASK = IDR10,953.6842
QUESTION 8 – AUGUST 2018 (QUESTION 1(b))
Mahmet bank gave the following quotations for RM/USD rates.
Spot rate RM3.3543/3.3558/USD
One-month forward rate 20/35
Malaysia United States
Three-month forward rate 8.5% p.a 9.5% p.a

i. Calculate the forward outright bid and offer rates of RM/USD for one-month
forward rate.
BID = RM3.3563
ASK = RM3.3593

ii. Calculate the forward outright bid and offer rates of RM/USD for three-month
forward rte.
BID = RM3.3459
ASK = RM3.3474

iii. How much USD would you receive today in exchange with RM23,500.
USD7,002.80

iv. If you need USD25,000 for delivery in one month, how much RM would you
exchange with?
RM83,982.50

v. Determine the annualized premium or discount on the RM/USD one month

forward and three-month forward offer rates.
1-MONTH
BID = 0.72%
ASK = 1.25%

3-MONTH
BID = -1.00%
ASK = -1.00%

vi. Compute the percentage bid-offer spread on the RM/USD spot rates.
0.045%
QUESTION 9 – DEC 2018 ((QUESTION 2(b))
As a currency trader, you take note of the following foreign exchange rates and interest
rates quotes:
Per unit of British Pound Per unit of Euro Dollar
(GBP) (EUR)
Spot rate RM5.3030/55 RM4.7100/35

6-month interest KL London Frankfurt

rate 6 percent 5 percent 6.5 percent

i. Calculate the 6-month forward rates in MYR per unit of GBP and per unit of EUR
respectively.
GBP
BID = RM5.3295
ASK = RM5.3320

EUR
BID = RM4.6982
ASK = RM4.7017

ii. Compute the spot bid-ask percentage spread in MYR per unit of GBP and per unit
of EUR respectively.
GBP = 0.0471%
EURO = 0.0743%

iii. Compute the spot and 5-month rate in EUR per unit of GBP.
SPOT RATE
BID = EUR1.1251
ASK = SUR1.1264

6-MONTH RATE
BID = EUR1.1335
ASK = EUR1.1349

iv. How much MYR would you receive now if you exchange with EUR5,000?
RM23,550

v. Compute the annualized forward percentage for GBP and EUR.

GBP
BID = 0.9994%
ASK = 0.9990%

EUR
BID = -0.5011%
ASK = -0.5007%
QUESTION 10 - JUN 2018 (QUESTION 2 (b))
You were given the following foreign exchange rates and interest rates quotes:
Per 100 units of Yen (¥) Per unit of Euro (€)
Spot rate RM3.3600/38 RM4.4210/32

KL Tokyo Frankfurt
6-month interest rate 3.00 percent 4.50 percent 2.50 percent

Calculate:
i. The 6-month bid and offer forward rates for RM/Yen and RM/Euro
YEN
BID = 3.3096
ASK = 3.3133

EURO
BID = 4.4031
ASK = 4.4453

ii. The spot bid-ask percentage spread for RM/Yen and RM/Euro
YEN = 0.1130%
EURO = 0.0497%

iii. The amount in RM would you receive if you exchange with Yen 25 Million for
delivery in six months
RM827,000

iv. The 6-month cross rate for Yen against Euro

BID = YEN132.7532
ASK = YEN132.9705
QUESTION 11 – JAN 2018 (QUESTION 2(b))
The following information are the foreign exchange rates and interest rate quoted at the
Kuala Lumpur financial market:
Per unit of USD RM4.2150/67
Spot rate Per unit of SGD RM3.1235/58
100 units of ¥100 RM3.9037/59

Ringgit USD SGD Yen

Three-month interest rate
3.75% 3.5% 4.75% 5.00%

Compute:
i. The amount received (in RM) if you sell USD70,000 for delivery in three months
RM295,232.00

ii. The amount received (in SGD) if you have RM220,000 now
SGD70,381.98

iii. The spot rate for SGD per unit of USD

BID = SGD1.3485
ASK = SGD1.3500

iv. The spot bid-ask percentage spread of RM/USD, RM/SGD and RM/¥100
RM/USD = 0.0403%
RM/SGD = 0.0736%
RM/¥100 = 0.0563%

v. The three-month forward rate for RM/SGD and RM/¥100

RM/SGD
BID = RM3.1157
ASK = RM3.1180

RM/¥100
BID = RM3.8915
ASK = RM3.8937
QUESTION 12 – JULY 2017 (QUESTION 2(b))
Allium Advisors, an international fund manager, plans to sell equities denominated in
British pound (GBP) and purchase an equivalent amount of equities denominated in
Egyptian Pound (EGP). The following are the current exchange rates between the EGP,
GBP and USD.
Maturity EGP/USD GBP/USD
Spot 13.2913/68 0.7936/79
30-day 35/65 53/33
90-day 52/48 22/40

Calculate:
i. The outright rates for 30 days and 90 days forward quotations

MATURITY EGP/USD GBP/USD

BID = 13.2948 BID = 0.7883
30-day
ASK = 13.3033 ASK = 0.0033
BID = 12.2861 BID = 0.7946
90-day
ASK = 13.2920 ASK = 0.8019

ii. How much GBP would you receive if you have USD600,450 for one month delivery
GBP473,334,735

iii. The 30-day percentage spread on the spot EGP per GBP quotation
0.85646%

iv. How much USD would you sell if you want EGP200,000 for delivery in three
months
EGP15,053.3264

v. The 90-day annualized premium or discount GBP in EGP

BID = -0.0215%
ASK = -0.0125%
QUESTION 13 – DECEMBER 2016 (QUESTION 2(b))
Below are the spot and 3-month quotation for RM/EUR and RM/JPY
Kuala Lumpur Quotations:
Per unit of Euro (€) 100 unit of Yen (¥)
Spot RM4.4920/60 RM3.9730/55
3-month forward 45/75 82/62

Calculate:
i. 3-month forward outright rates for the Euro and Yen quotations
PER UNIT OF EURO
SPOT → BID = RM4.4920 ASK =4.4960
3-Month → BID = RM4.4965 ASK = 4.5035

100 UNITS OF YEN

SPOT → BID = RM3.9730 ASK = RM3.9755
3-Month → BID = RMR3.9648 ASK = RM3.9693

ii. Spot percentages bid-ask spread for RM/€ and RM/¥100

RM/EURO = 0.089%
RM/1OO YEN = 0.063%

iii. Annualized bid forward percentage for RM/€ and RM/¥100

RM/EURO = 0.4007%
RM/100YEN = -0.8256%

iv. The amount paid to buy ¥500,000, delivery in 3-month times

RM19,846.50

v. Spot cross rates of Yen per unit of €

BID = YEN88.3674
ASK = YEN88.5000
QUESTION 14 – JUN 2016 (QUESTION 2(b))
Aurora Borealis Advisors are given the following information:
Currency Exchange Rates
Maturity Value of Malaysian Ringgit (RM) Value of Jordanian Dinar (JOD) in
in Australian Dollar (AUD) Malaysian Ringgit (RM)
Bid Ask Bid Ask
Spot 0.40000 0.5000 4.2000 4.3000
30-day 20/10 10/20
60-day 15/25 25/15
Three-month Interest Rates (percent)
Malaysia Australia Jordan
3.0 3.5 2.5

Calculate the:
i. Outright rates of RM per AUD at 30 days
AUD/RM
BID = 0.3980
ASK = 0.4990

RM/AUD
BID = 2.0040
ASK = 2.5126

ii. 2-month forward bid outright RM per JOD

4.1975

iii. Percentage spread on the spot AUD per JOD quotation

21.86%

iv. Bid and ask rates of AUD per JOD in 90 days

BID = 1.6842
ASK = 2.1554

v. 3-month annualized premium (discount) of AUD in JOD

BID = 0.9483%
ASK = 0.9431%
QUESTION 15 – JULY 2021 (QUESTION 1(a))
You are given the following quotes:
Quoted Price
Value of Singapore dollar Value of Ringgit (RM) in
(SGD) in Ringgit (RM) Canadian dollar (CAN)
Spot 3.0215/70 3.1428/62
30-day forward 75/65 55/45
60-day forward 70/80 60/70
Country Rate
Three months interest rate Malaysia 15%
per annum Canada 10%
Singapore 20%

Calculate:
i. The 30-day forward outright of Ringgit in Canadian dollar
KRW10,000,000

ii. The 90-day forward outright in Singapore dollar in Ringgit

SGD189,100

iii. The amount of SGD you should pay for RM10,000 for delivery in 3-month
SGD529,100

iv. The amount to be paid in Ringgit if your bank about to receive SGD5,000 in one
month’s time
0.1188%
QUESTION 16 – DEC 2016 (QUESTION 2(b))
Below are the spot and 3-month quotation for RM/EUR and RM/JPY
Kuala Lumpur Quotations:
Per unit of Euro (€) 100 units of Yen (¥)
Spot RM4.4920/60 RM3.9730/55
3-month forward 45/75 82/62

Calculate the:
i. 3-month forward outright rates for the Euro and Yen quotations
PER UNIT OF EURO
SPOT → BID = 4.4920 ASK = 4.4960
3-Month → BID = 4.4965 ASK = 4.5035

100 UNITS OF YEN

SPOT → BID =3.9730 ASK = 3.9755
3-Month → BID = 3.9648 ASK = 3.9693

ii. Spot percentages bid-ask spread for RM/€ and RM/¥100

RM/EURO = 0.089%
RM/YEN100 = 0.063%

iii. Annualized bid forward percentages for RM/€ and RM/¥100

RM/EURO = 0.4007%
RM/100YEN = -0.8256%

iv. The amount paid to buy ¥500,000, delivery in 3-months’ time

RM19,846.50

v. Spot cross rates of Yen per unit of €

BID = YEN112.9921
ASK = YEN113.3979

END OF QUESTIONS