Question
You plan to take a business trip to Europe and want to convert $2,000 to Euros. The U.S. bank quote for the Euro is $1.3853-1.3888,
You plan to take a business trip to Europe and want to convert $2,000 to Euros. The U.S. bank quote for the Euro is $1.3853-1.3888, meaning the bank will buy Euros at $1.3853 and sell Euros at $1.3888. (a) Calculate the amount of Euros you will receive from the U.S. bank. (b) On your trip, you complete all of your business in Europe and therefore use none of your Euros. When you return to the U.S., you want to change your Euros back to dollars. You note the banks quote for Euros is unchanged at $1.3853-1.3888. Calculate the amount of dollars you will get back. (c) How much have you paid for the two currency conversions? (d) Calculate the percentage spread using the following formula: (Ask rate-Bid rate)/Ask rate=% Bid/Ask Spread
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started