Compute the indirect quote for the spot and forward Canadian dollar, yen, and Swiss franc contracts.
An attachment goes with your question. We cannot come up wth numbers out of thin air.
http://www.solutionlibrary.com/business/finance/ch-17-exchange-rates-spot-prices-indirect-quotes-arbitrage-cross-rates_7rff
i need some help of money for my sister's marriage and it is very needfull for me.
To compute the indirect quote for spot and forward Canadian dollar, yen, and Swiss franc contracts, you need to understand the concept of direct and indirect quotes in foreign exchange.
Direct quote: The direct quote is a ratio where the domestic currency is the numerator and the foreign currency is the denominator. It shows how much of the foreign currency is needed to buy one unit of the domestic currency.
Indirect quote: The indirect quote is the reciprocal of the direct quote, where the domestic currency becomes the denominator and the foreign currency becomes the numerator. This shows how much of the domestic currency is needed to buy one unit of the foreign currency.
To get the indirect quote for the spot and forward contracts, you'll need to find the direct quote first, and then take the reciprocal.
Step 1: Find the direct quote for each currency pair (Canadian dollar, yen, and Swiss franc) in terms of the domestic currency (e.g., US dollar). You can obtain these direct quotes from financial news sources, trading platforms, or currency converters.
Step 2: Once you have the direct quotes, take the reciprocal (invert the numerator and denominator) to get the indirect quote for each currency.
For example:
- If the direct quote for the Canadian dollar (CAD/USD) is 1.25, the indirect quote would be 1/1.25 = 0.80 (indicating that 0.80 US dollars are needed to buy one Canadian dollar).
- If the direct quote for the yen (JPY/USD) is 110, the indirect quote would be 1/110 = 0.0091 (meaning that 0.0091 US dollars are needed to buy one yen).
- If the direct quote for the Swiss franc (CHF/USD) is 0.95, the indirect quote would be 1/0.95 = 1.05 (suggesting that 1.05 US dollars are needed to buy one Swiss franc).
Remember to check the currency pair and the base currency to ensure you are calculating the indirect quote correctly.
It is important to note that exchange rates can fluctuate due to various factors, such as economic conditions and geopolitical events. Therefore, the direct quotes and corresponding indirect quotes may change over time.