Bank A (Milan) 000s

Assets Liabilities and Equity

OLD NEW OLD NEW
€ deposit at B € 500 € 600 B's Eurodollar deposit $ 900 $ 1025
$ deposit at B $ 800 $ 675 B's € deposit € 220 € 120
Cash in the Vault € 200 € 200 Other Liabilities € 300 € 300
Other Assets € 400 € 400 Owners Equity € 500 € 500
Total Assets @ €1.00 = Total Liabilities & Equity @ €1.00 =
€ 1,740 € 1,740 € 1,740 € 1,740
$1.25 $1.25

Bank B (NYC) 000s

Assets Liabilities and Equity
OLD NEW OLD NEW
Eurodollar Deposit at A € 900 € 1000 A's euro deposit $ 500 € 725
€ deposit at A $ 220 € 175 A's $ deposit € 800 € 700
Cash in the Vault € 200 € 200 Other Liabilities € 200 € 200
Other Assets € 600 € 600 Owners Equity € 350 € 350
Total Assets @ €1.00 = Total Liabilities & Equity @ €1.00 =
€ 1,975 € 1,975 € 1,975 € 1,975
$1.25 $1.25

Bank A (Asset)

€ deposit at B= €500 + ($125/$1.25)= €600

$ deposit at B= $800-$125= $675

Bank A (Liabilities)

B's Eurodolla deposit= $900+$125= $1025

B's € deposit= €220-€100=€120

Bank B (Asset)

Eurodollar Deposit at A=€900+€100=€1000

€ deposit at A= ($220X$1.25) - €100= €175

Bank B (Liabilities)

A's euro deposit= ($500X$1.25)+€100=€725

A's $ deposit= €800-€100= €700

Bank A (London) 000s
Assets Liabilities and Equity
OLD NEW OLD NEW
£ deposit at B £ 500 £ 550 B's Eurodollar deposit $ 850 $ 950
$ deposit at B $ 1,000 $ 900 B's £ deposit £ 100 £ 50
Cash in the Vault £ 200 £ 200 Other Liabilities £ 300 £ 300
Other Assets £ 400 £ 400 Owners Equity £ 775 £ 775
Total Assets £ 1,600 £ 1,600 Total Liabilities & Equity £ 1,600 £ 1,600

Bank B (NYC) 000s

Assets Liabilities and Equity
OLD NEW OLD NEW
Eurodollar
$ 850 $ 950 A's £ deposit £ 500 £550
Deposit at A
£ deposit at A £ 100 £ 50 A's $ deposit $ 1,000 $900
Cash in the Vault $ 200 $ 200 Other Liabilities $ 200 $200
Other Assets $ 1,000 $ 1,000 Owners Equity $ 50 $50
Total Liabilities &
Total Assets $ 2,250 $ 2,250 $ 2,250 $2,250
Equity

Bank A (Asset)

£ deposit at B= £500 + ($100/$2)= £550

$ deposit at B= $1,000-$100= $900

Bank A (Liabilities)

B's Eurodolla deposit= $850+$100= $950

B's £ deposit= £100-£50=£50

Bank B (Assets)

Eurodollar Deposit at A=$850+$100=$950

£ deposit at A= £100-£50= £50

Bank B (Liabilities)

A's £ deposit= £500+£50=£550

A's $ deposit= $1000-$100= $900

e table what is the 6-month forward pound–yen cross-exchange rate?

Monday

£= $1.7461

¥= $0.0087

=0.0050

£0.0050 £1.00 $0.008724

= ×
¥1.00 $1.7409 ¥1.00

¥200/£ is ok too

3-month forward premium or discount (expressed as an annual percentage rate) for

the British pound in terms of U.S. dollars?

$1.738 − $1.7368 360

0.28% = ×
$1.7368 90

2.8% is a grievous error.

using the table, what is the Canadian dollar–euro spot cross-exchange rate?

1.3846/€= (CAD1.00/$0.8667)X($1.20/€1.00)
CAD 1€=1.3846