The Current Exchange Rate Is £1

question 59

Multiple Choice

The current exchange rate is £1.00 = $2.00. Compute the correct balances in Bank A's correspondent account(s) with bank B if a currency trader employed at Bank A buys £45,000 from a currency trader at bank B for $90,000 using its correspondent relationship with Bank B.

• A) Bank A's dollar-denominated account at B will fall by $90,000.
• B) Bank B's dollar-denominated account at A will rise by $90,000.
• C) Bank A's pound-denominated account at B will rise by £45,000.
• D) Bank B's pound-denominated account at A will fall by £45,000.
• E) All of the above are correct

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