Answer to Question #267084 in Finance for DEE

Question #267084

Mrs Ireen Ndhlovu kaleji has US$ 2,000 which she is planning to exchange with Zambian Kwacha. She inquires from the bank and is given the following information:


Ask price                  Bid price

1 USD                       K10                             K9.5

1 ZWM                      K0.806                      K0.79

The other information showed the following:

                                             Ask price                  Bid price

1 ZMW                      US$ 0.10                      US$ 0.105

1 ZMW                      ZAR 1.241                   ZAR 1.268


a)  Explain to Mrs. Kaleji the differences of the quotations given above       

b)  Explain to Mrs. Kaleji the differences between BID and ASK prices in exchange rate                                                                                                                    

c)  How much Zambian kwacha is Mrs Kaleji expecting to be given by the bank if she sells US$ 2,000                                                                                      

d)  How much South African is Mrs Kaleji expecting if she sold US$ 2,000 to the bank                                                                                                                          

e)  Explain the functions of the exchange rate in international trade                


Expert's answer

Currency INR (Indian rupees)

Conversion rate=1 peso=1.54 INR

So formula will be


Where X=peso and y=INR

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