Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / You graduate college and decide to travel around the world
You graduate college and decide to travel around the world. You start with USD 10,000 and visit a currency exchange in every country you visit to convert your remaining money to the local currency. As expected, the currency exchange will sell a currency to you at the offer rate, and it will buy a currency from you at the bid rate. Lucky twist! You are very fortunate that you make a good, rich friends in ever place you visit and they insist on paying for everything. Convert your USD 10,000 according to your travel itinerary and rate sheet below. Itinerary: • US to Canada (e.g. sell 10,000 USD, buy XX CAD) Canada to France (e.g. sell XX CAD, buy YY EUR) • France to Switzerland • Switzerland to the U.K. • U.K. to Japn • Japan back to the U.S. Rate Sheet: BID ASK USD per 1 Euro 1.20394 1.20404 USD per 1 GBP 1.33992 1.34002 JPY per 1 USD 104.386 104.396 CAD per 1 USD 1.29559 1.29569 GDP per 1 EUR 0.898440.89854 JPY per 1 GBP 139.875 139.885 CAD per 1 EUR 1.5599 1.561 CAD per 1 GBP 1.73589 1.73619 CHF per 1 EUR 1.08373 1.08383 CHF per 1 GBP 1.20608 1.20627 a. How much money do you have when you return to the U.S.? Why don't you have $10,000?
On going from US to Canada
US$10000 , one will get CAD 1.29559 per USD, and thus a total amount of CAD 12955.90
On going from Canada to France
For CAD 12955.90,one will get EUR 1/1.56 per CAD, and a total amount of EUR 12955.90/1.56 = EUR 8305.0641
On going from France to Switzerland
For EUR 8305.0641,one will get CHF 1.08373 per EUR, and a total amount of CHF 8305.0641*1.08373 = CHF 9000.44712
On going from Switzerland to UK
One will have to give CHF 1.20627 per GBP, and get a total amount of GBP 9000.44712/1.20627 = GBP 7461.38685
On going from UK to Japan
One will get JPY 139.875 per GBP, and get a total amount of JPY 7461.38685*139.875 = JPY 1043661.49
On going from Japan to US
One will have to give JPY 104.396 per USD and get a total amount of USD 1043661.49/104.396 = JPY 9997.14
So, When returned to US, you have USD 9997.14 .
One has less amount due to transaction cost (indirect) incurred by converting the Currency again and again
