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2) After the corona virus pandemic problem, you are planning to visit some friends in...

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Finance

2) After the corona virus pandemic problem, you are planning to visit some friends in Berlin, London and Istanbul. You plan to spend the equivalent of 1,000 USD each in Berlin, Istanbul, and London for a total of 3,000 USD. Banks in Azerbaijan offers you the following bid-ask quotes:

Bid Offer

AZN USD 1.6970 1.7030

USD EUR 1.1040 1.1050

TRL USD 6.8000 6.9000

USD GBP 1.2334 1.2354

(If you want to buy USD against AZN banks sell at the price of 1.7030 AZN for 1 USD. If you want to buy AZN against USD banks buy at the price of 1.6970 AZN for 1 USD.)

(a) If you accept these quotes, how many EUR, TYL, and GBP do you have at departure?

(b) If you return with EUR 300, TRL 1,000, and GBP 75, and the exchange rates are unchanged, how many AZN do you have?

(c) Suppose that instead of selling your remaining EUR 300 once you return home, you want to sell them in London. At the airport, you have seen two banks: one of them offered EUR / GBP 1.1172 - 1.1200, while other bank offers EUR / GBP 1.1152 1.1190. At what rate are you willing to sell your 300 EUR? How many GBP will you receive?

Hint: Assume that you already have 3,000 USD and start with USD.

Show all your calculations. Use 4 digit after comma. (10 points)

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