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John Moffat says
May 14, 2020 at 3:14 pm
The reason for there being two rates is so that the bank can make a profit. Although I actually do explain the ‘rule’ in my lectures, it is always whichever rate is worse for the company (because it is the bank who profits). So when receiving we use the higher rate (using the lower rate would mean we received more, which cannot be the case). When paying we use the lower rate (using the higher rate would mean we paid less, which cannot be the case).
The same rule applies when using forward rates.
I do suggest that you watch the lectures again.
June 25, 2019 at 7:26 pm
i would like to ask that when we are paying or receiving the exhange rate in 2nd problem we are taking spot as $/euros 1.6250-1.6310 and in receiving we are taking $100000*1.6310 …. so what is the rule or logic behind taking spot as 1.6310 becuz i cant understand it in pay we are taking spot IR/R$ 8.6380-9.2530 here we are dividing like 240000*9.2530
forward contracts i cant udstd that spot sometimes it is taken great number and sometimes small number .. briefly explain the logic behind buying and selling of a company cuz they didnt mention in the question whether to buy or sell it the $ or pounds
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