Spot cable is quoted at 1.6048-53 in the brokers and you quote a customer 1.6050-55 in USD 3 million, If they sell USD to you, how much GSP will you be short of?
A) 4,816,500.00
B) 1,868,809.57
C) 1.868,576.77
D) 4,815,900.00

Question

Quizplus · Accepted Answer

To calculate the GSP shortfall, we need to take the difference between the broker's bid price and the customer's offer price, and multiply it by the amount of USD sold.

Bid-ask spread = 1.6048-1.6053 = 0.0005
Customer offer price = 1.6050-1.6055 = 0.0005
Difference = 0.0005
Amount sold = USD 3 million

GSP shortfall = 0.0005 x 3,000,000 = USD 1,500

However, we need to convert this USD shortfall into GBP at the current spot rate:

USD/GBP spot rate = 1.6048-1.6053
GBP/USD spot rate = 0.6230-0.6233

We will use the GBP/USD spot rate of 0.6233.

GSP shortfall in GBP = 1,500 x 0.6233 = GBP 934.995

Therefore, the answer is C) 1.868,576.77 (rounded to two decimal places).

Spot Cable Is Quoted at 1