EXCHANGE RATES.doc - EXCHANGE RATES A UK Investment Manager...

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EXCHANGE RATES A UK Investment Manager has customers both in the UK and the USA. Its UK customers pay their fees in £ but its US customers pay in $. It costs the UK manager £500,000 per annum to provide these to the US investors. All these costs are incurred in sterling. Its dollar income from the US clients is around $1,000,000 per annum. If
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Unformatted text preview: the exchange rate stays at $1.50/£1, then is it making a profit? If so, how much? But say the dollar falls in value against the £ and we have an exchange rate of $2.10/£1. What the profitability now?...
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