Quiz 2 Spring 12 AnsV2 - Copy

# Quiz 2 Spring 12 AnsV2 - Copy - Quiz 2 1 Consider a U.S...

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Quiz 2 1. 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 Answer: Total cost to the importer in \$ = €512,000/€1.0242 = \$499,902.36 ≈ \$500,000 US\$ Equivalent Country BID ASK Canada (Dollar) 0.8653 0.86 67 Euro (€) 1.4000 1.42 00

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2. Using the above table, what is the BID cross-exchange rate for Canadian dollars priced in euro ? Hint : Find the price that a currency dealer will pay in euro to buy Canadian dollars. A. €0.6094/CAD B. €0.6104/CAD C. €0.6181/CAD D. €0.6191/CAD Answer: Note the table reports the exchange rates in American quotes. S
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Quiz 2 Spring 12 AnsV2 - Copy - Quiz 2 1 Consider a U.S...

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