InternationalFinancialManagement_5thEd_Eun_TestBank05

# InternationalFinancialManagement_5thEd_Eun_TestBank05 - 05...

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9. The standard size foreign exchange transactions are for: A. \$10 million U.S. B. \$1 million U.S. C. 1 million 10. Consider a U.S. importer desiring to purchase merchandise from a Dutch exporter invoiced in euros, at a cost of 512,100. The U.S. importer will contact his U.S. bank (where of course he has an account denominated in U.S. dollars) and inquire about the exchange rate, which the bank quotes as 1.0242/ \$1.00. The importer accepts this price, so his bank will ____________ the importer's account in the amount of ____________. A. Debit, \$500,000 B. Credit, 512,100 C. Credit, \$500,000 D. Debit, 512,100 11. The current exchange rate is 1.00 = \$2.00. Compute the correct balances in Bank A's correspondent account(s) with bank B if a currency trader employed at Bank A buys 45,000 from a currency trader at bank B for \$90,000 using its correspondent relationship with Bank B. A. Bank A's dollar-denominated account at B will fall by \$90,000.
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## This note was uploaded on 07/28/2011 for the course FIN 308 taught by Professor Canarella during the Summer '11 term at University of Nevada, Las Vegas.

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