Quiz 2 Spring 12 AnsV2 - Copy

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

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
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
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
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
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

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

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online