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Q.36 Kenduri (BPP revision kit)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Q.36 Kenduri (BPP revision kit)

  • This topic has 1 reply, 2 voices, and was last updated 1 month ago by John Moffat.
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  • June 9, 2022 at 1:25 pm #658102
    Ron123
    • Topics: 54
    • Replies: 71
    • ☆☆

    Hi, the spread of the spot exchange rate is given as 1.5938 — 1.5962 (US$/pound), so if I buy US$, I use 1.5938. If I sell US$, I use 1.5962.

    In the sample answer, when converting the $2,381,543 into UK pound, am I not supposed to sell $ to get UK pound, and hence, I use 1.5962. But, 1.5938 is used instead to convert $2,381,543 into 1,494,255 pound. Please may I know why that is so?

    Thank you.

    June 9, 2022 at 4:10 pm #658140
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49902
    • ☆☆☆☆☆

    If they were receiving US$’s then you would be correct.

    However they are not receiving US$’s – there is a net payment of $’s and therefore they are buying $’s and therefore use 1.5938.

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