A Bank Quotes a Spot Rate That Is Verifiably Incorrect

question 217

Multiple Choice

A bank quotes a spot rate that is verifiably incorrect and deviates substantially from the prevailing market rate.

• A) you should hit the price and hold the bank to the quoted incorrect rate, as the quoted party is entitled to hold the quoting party to an erroneous rate
• B) you should ask the dealer to check his price, as it is highly unethical for one party to hold another to an erroneously agreed rate
• C) you should point out the mistake and split the difference
• D) you should keep on dealing with this bank until the mistake is rectified

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Definitions:

Investment

The allocation of resources, such as time, money, or effort, in the expectation of generating a future benefit or profit.

Equity Carrying Amount

The net amount at which an asset or liability is reported in the balance sheet, often referring to the value of an investment in another entity after adjustments.

Net Assets

The total assets of an entity minus its total liabilities, representing the owner's or shareholder's equity in the entity.

AASB 128

The Australian Accounting Standards Board standard related to the accounting for investments in associates and to set out the application of the equity method when accounting for investments in associates and joint ventures.