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
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
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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