QUESTION 2 (Continued) e) The AUd is usually quoted indirectly d The spread is the difference between the BID and OFFEr quotes, and represents the dealers profit ( BUY LOW, SELL HIGH) e) The spread is as follows 0.54(61)-0.54(21)=40 points( or pips) The 0.54 is the " big figure"and need not be quoted over the phone as the dealers can assume that the other party knows what this is at the time QUESTION 3 a) USD/AUD 1.7483 b)NZD/￥0.3115 ) SAR/MYR 175.44 d) AUD/CAD 0.9998 QUESTION 4 Spot transaction- if a currency is bought or sold"spot ", it is settled within two(2) business days If I million AUD is sold on Friday to a bank, then USD equivalent will be cred ited to the sellers account the following tuesday Forward transaction-settlement occurs 3 or more business days after the date on which the contract is made QUESTION 5 It should be stressed that the bank will buy low and sell high, thus making a profit a) The bank will sell lAUD for 0.5461USD. I will therefore need to sell USD 546 100 to be able to buy aud 1 million b) The bank will buy lAUD for 0.5421USD. I will need to sell AUD 92 233 905(USD 50m/0.5421) to enable me to buy USD 50 millionOctober 2003 QUESTION 2 (Continued) c) The AUD is usually quoted indirectly. d) The spread is the difference between the BID and OFFER quotes, and represents the dealer’s profit (BUY LOW, SELL HIGH). e) The spread is as follows: 0.54(61) - 0.54(21) = 40 points (or pips) The 0.54 is the "big figure" and need not be quoted over the phone as the dealers can assume that the other party knows what this is at the time. QUESTION 3 a) USD/AUD 1.7483 b) NZD/¥ 0.3115 c) SAR/MYR 175.44 d) AUD/CAD 0.9998 QUESTION 4 Spot transaction - if a currency is bought or sold "spot", it is settled within two (2) business days. If 1 million AUD is sold on Friday to a bank, then USD equivalent will be credited to the seller's account the following Tuesday. Forward transaction - settlement occurs 3 or more business days after the date on which the contract is made. QUESTION 5 It should be stressed that the bank will buy low and sell high, thus making a profit. a) The bank will sell 1AUD for 0.5461USD. I will therefore need to sell USD 546 100 to be able to buy AUD 1 million. b) The bank will buy 1AUD for 0.5421USD. I will need to sell AUD 92 233 905 (USD 50m/0.5421) to enable me to buy USD 50 million