Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Matthew purchased US$9,000 from a bank in America, which charged her a commission of 0.6%, and sold the US dollars to a bank in Canada, which charged her a 0.25% commission. How much money did she lose or gain? Assume that the exchange rate was C$1 = US$0.8996.
Please don't use Excel format.
Expert Solution
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Step 1: Computing amount of US$ which Matthew received after the commission to the bank in America:
VIEWStep 2: Converting US$ to C$ by using exchange rate:
VIEWStep 3: Computation of commission charged by Canadian bank:
VIEWStep 4: Calculating amount of money that Matthew received in Canadian dollars after all commissions:
VIEWStep 5: Calculating the exchange rate without commissions:
VIEWStep 6: Loss or profit for Matthew in this transaction:
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