Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your treasury department at the banks head office quoted the following rates: USD/MYR AUD/USD Spot 3.8050 / 70 0.7420 / 30 1-month 65 / 70

Your treasury department at the banks head office quoted the following rates:

USD/MYR

AUD/USD

Spot

3.8050 / 70

0.7420 / 30

1-month

65 / 70

25 / 20

3-month

185 / 200

58 / 55

6-month

360 / 385

111 / 109

As a remittance officer at the banks Butterworth branch, you are helping a customer who wants a special rate to pay an import bill worth AUD 0.5 million. Given the above rates and assuming you want to make a 1 sen profit from this deal, at what spot exchange rate would you quote the customer and how much of the local currency does the customer need to pay your bank? (Show your assumptions and how you arrive at your answer)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Global Corporate Finance A Focused Approach

Authors: Kenneth Kim, Suk Kim

3rd Edition

9811207119, 9789811207112

More Books

Students also viewed these Finance questions

Question

How effective have these groups been in the past?

Answered: 1 week ago

Question

What are their reputations?

Answered: 1 week ago

Question

How serious a response is warranted to this situation?

Answered: 1 week ago