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A foreign exchange trader gives the following quotes for the Belgian franc spot, one- month,...

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Finance

A foreign exchange trader gives the following quotes for the Belgian franc spot, one- month, three-month and six-month to a US- based treasurer.

$0.02478/80 4/6 9/8 14/11

(a) Calculate the outright quotes for one, three and six months forward.

(b) If the treasurer wished to buy Belgian francs three months forward, how much would he pay in dollars?

(c) If he wished to purchase US dollars one month forward, how much would he have to pay in Belgian francs?

(d) Assuming that Belgian francs are being bought, what is the premium or discount, for the one, three and six- month forward rates in annual percentage terms?

(e) What do the above quotations imply in respect of the term structure of interest rates in the USA and Belgium?

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