a.

b.

Suppose that this month the exchange rate has increased to $1.32 and that it is time for Nevada Co. to makes its monthly purchase of materials from Spicurity In order to conduct this transaction this month, Nevada Co. now requires $ the transaction must reduce Nevada's account by this amount, denominated in and credit it to Spicurity's account to pay for the materials. Thus, the bank handling The bank must then convert this amount to True or Fabe: The bank has not acted as a foreign exchange dealer in this transaction. False True Before your vacation to France, you had also been considering a vacation to Iceland, Iceland's currency is the Krona, and at the time, your banks bid rate was $0.007833 and its ask rate was $0.0081 In this case, the nominal bid/ask spread for the Krona is dollars per krona. This can be misleading, however, since the bid/ask spread in percentage terms is than that of the euro in this example. lower STEP: 1 of 3 Suppose that Nevada Co., a US-based MNC, makes regular, monthly purchases of materials from a German supplier named Spicuity. These regular payments are typically in the amount of 110,000 euros. Last month the exchange rate was $1.24 per euro. Nevada Co. only has cash reserves in dollars, while Spicurity only has cash reserves in euros, Suppose both companies use the same bank, In order to conduct this transaction last month, Nevada Co. required $ 136,400.00 to pay for the materials. Thus, the bank handing the transaction reduced Nevada's account by this amount, denominated in dollars. The bank then converted this amount to 110,000.00 euros and credited it to Spicurity's account. Suppose that this month the exchange rate has increased to $1.32 and that it is time for Nevada Co. to makes its monthly purchase of materials from Spicurity In order to conduct this transaction this month, Nevada Co. now requires $ the transaction must reduce Nevada's account by this amount, denominated in and credit it to Spicurity's account. to pay for the materials. Thus, the bank handling The bank must then convert this amount to True or False: The bank has not acted as a foreign exchange dealer in this transaction. False True