FinanceCasePresentationRichardCraib

FinanceCasePresentationRichardCraib - FinanceCase Finance...

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nance Case Finance Case M.M.O Currency Transfer Questions a e ichard Craib Richard Craib
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hat’s Going On? Mr. M.M.O What s Going On? 5000 $$ €15000 Æ $$$ Europe Bank converts€to $ Sends $ to USA Citibank receives $$ $10 at interbank rate, and charges 0.15% Europe Bank Sends€to USA Citibank Receives€and nverts to $ at $10 converts to $ at interbank rate with 0% charge
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e Choice & Result The Choice & Result Europe Bank Sends€to USA Citibank Receives€and converts to $ at terbank rate $10 interbank rate with 0% charge €15000 Æ $22890
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Citibank Bank’s Rate a) Citibank Bank s Rate 5000q = 22890 ?. ..No. 15000q 22890 ?. 15000q 10 = 22890 52667 q=1.52667 But what was the prevailing rate that day? Average (1 days): 1.55500 High: 1.56220 Is Mr. M.M.O being ripped off? Low 1.54920
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The Effective Fee a) The Effective Fee Fee = ($ from Euros) – ($ given to M.M.O) = 15000q + 10 – 22890 L = 15000q L + 10 – 22890 = 15000(1.54920) + 10 – 22890 = $358 H = 15000q H + 10 – 22890 = 15000(1.56220) + 10 – 22890 = $553 verage (1 days): .55500 Average (1 days): 1.55500 High: 1.56220 Low 1.54920
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Europe > USA? b) Europe > USA?
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This document was uploaded on 10/08/2008.

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FinanceCasePresentationRichardCraib - FinanceCase Finance...

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