Skip to content

CMA Final · Strategic Financial Management · Foreign Exchange Market

A Mumbai exporter receives a quote from a bank: USD/INR spot 83.2000 - 83.2800 (bid - ask). The exporter sells USD 50,000 to the bank at spot. How many rupees will the exporter receive?

The exporter receives Rs 41,60,000. When the bank buys dollars from the customer it uses its lower bid rate of 83.20, so 50,000 multiplied by 83.20 gives Rs 41,60,000. The ask rate applies only when the bank sells dollars.

  1. ARs 41,60,000Correct
  2. BRs 41,64,000
  3. CRs 41,56,000
  4. DRs 83,20,000

Explanation

The bank buys USD at its bid rate, 83.2000. Rupees received = 50,000 x 83.20 = Rs 41,60,000. Using the ask rate of 83.28 would give Rs 41,64,000, which is the bank's selling rate and is wrong for this transaction.

Did you get it right without looking?

One question tells you little. A timed set on Foreign Exchange Market shows your real accuracy, how long you take and where you lose marks.

Practise Foreign Exchange MarketFree diagnostic mock

More Foreign Exchange Market questions