Page 138 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Chapter 12

Example 1

Solution

(a) X Ltd are receiving USD, so will be selling USD to the bank.

The bank are therefore buying, the bank always buys high, so the rate
used is 1.3520

$125,000/1.3520 = £92,455.62 £92,456

(b) Y Ltd need to buy USD, so the bank will be selling.

The bank sell low, so the rate used is 1.2520.

$250,000/1.2520 = £199,680.51 £199,681

(c) Z Ltd are importing goods, so will be buying USD to pay the US supplier.

The bank are selling, so the rate used is 1.2520.

£30 × 1.2520 = $37.56 $38

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