A Bank Exchanging Foreign Currency Makes Its Profit in What

question 41

Multiple Choice

A bank exchanging foreign currency makes its profit in what manner?

• A) On the difference between the spot rate and the foreign rate
• B) A bank is forbidden, by law, to charge a premium in foreign currency exchange
• C) On the present value of the forward rate discounted to the date an option is purchased
• D) On the difference between the buying and selling rates

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Definitions:

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payee able to transfer it to another holder.

Good Contract

An agreement that is valid under the law and contains all the essential elements making it enforceable and binding.

Definition

A statement that explains the meaning of a term or phrase, clarifying its notion and context within a particular field.

Technical Requirements

Detailed specifications to which a product, service, or system must adhere.