Question

Explain why at your Bank the are quoting you Euros at 1.16-1.20, while at the Airport...

Explain why at your Bank the are quoting you Euros at 1.16-1.20, while at the Airport kiosk the quote is 1.15-1.21, and at your broker's automated screen it shows 1.1821-1.1822?

Homework Answers

Answer #1

The differences between the quotation of euros among the bank, airport kiosk and the broker's automated screen is the demand-supply economics and the margin or the charges respective institutions wish to charge by exchanging euros.

Banks and airport kiosks has the huge demand for exchange of currency as people wish to exchange currency either before-hand going to the airport ie from their bank OR they wish to have it exchanged at the airport only. So, these institutions buy/sell currency accordingly and keep the exchange rates in a range for a particular period (generally a day). On the other hand, the broker's automated screen might show the real time rates, if anyone wishes to trade in the currency.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume you are a trader with Deutsche Bank. From the quote screen on your computer terminal,...
Assume you are a trader with Deutsche Bank. From the quote screen on your computer terminal, you notice that Dresdner Bank is quoting €0.855/$1.00 Credit Suisse is offering SF1.1825/$1.00. UBS’s current direct quoting €/SF currently @ € 0.754/SF i. Prove and explain whether at these quoted rates there a chance for triangular arbitrage (Hint: Use the no arbitrage cross exchange rate here). ii. Show and explain how you can make a triangular arbitrage profit by trading at these prices. (Ignore...
Assume that you are a trader with Barclays Bank in London. From the screen on your...
Assume that you are a trader with Barclays Bank in London. From the screen on your terminal, you notice that HSBC Bank is quoting $ 1.5150 / £ 1.00. Credit Suisse is quoting SF 1.4150 / $ 1.00. You learn that UBS is making a direct market between Swiss franc and British pound, with a current SF/ £ quote of 2.1625. Assume you have $ 100,000 to conduct the arbitrage. a) Is there an arbitrage opportunity? Show the required calculations....
Assume you are going to take a trip to Paris. You buy Euros at your local...
Assume you are going to take a trip to Paris. You buy Euros at your local bank or the airport. Then you start spending them once you are in Paris. Every time you buy something there, you explicitly or implicitly translate the Euro price into dollar. You might say to yourself, "How can Parisians afford such high prices?" What is wrong with this line of reasoning? Explain. (Hint: Consider what currency do Parisians earn their money?
You have just landed in the airport of Frankfurt, Germany, ready to embark on the first...
You have just landed in the airport of Frankfurt, Germany, ready to embark on the first leg of your European holiday. Having arrived from the US, you have USD $5,000, that you wish to exchange into the local currency. You are also surprised to find a gift of JPY 30,000 that your parents have slipped into your luggage as additional spending money. You compare the exchange rates of the following dealers to obtain local currency: Brauhaus FX EUR/USD   1.21/1.13 EUR/JPY...
Why is it important for you to explain/discuss any gaps in your work history during an...
Why is it important for you to explain/discuss any gaps in your work history during an interview or in a cover letter? What can you do, while not working, to help fill in those gaps?
Imagine that you carried out a transaction for Product A with your German credit card during...
Imagine that you carried out a transaction for Product A with your German credit card during your stay in Brazil. The currency of Brazil is the Real (BRL), while that of Germany, as you know, is the Euro (EUR). a) Please include and interpret a graph that shows the evolution of the nominal exchange rate EUR/BRL in the last years (suggested platforms XE.com, or also on google directly). What is the nominal exchange rate on the day of the exam?...