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Hi there,
I am a little stuck on why the rate 1.1559 was used if it was a receipt? Shouldn’t it be the higher rate? If it’s a receipt you buy higher and if a company is borrowing you sell lower?
Thank you!
PiyaaHave you got the right exam? There is no question Lirio in the Sept/Dec 2016 hybrid exam.
They are receiving Euros, and because the rate is quoted at $’s per Euro, we need to multiply by the exchange rate.
If you used the higher rate, they would receive more!! That cannot be the case – it is always the rate that is worst for the company – it is the bank that makes the profit from the difference between the exchange rates 🙂
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