The Current Exchange Rate Is €1

question 27

Multiple Choice

The current exchange rate is €1.00 = $1.50.Compute the correct balances in Bank A's correspondent account(s) with Bank B if a currency trader employed at Bank A buys €100,000 from a currency trader at Bank B for $150,000 using its correspondent relationship with Bank B.

• A)Bank A's dollar-denominated account at B will fall by $150,000.
• B)Bank B's dollar-denominated account at A will fall by $150,000.
• C)Bank A's pound-denominated account at B will fall by €100,000.
• D)Bank B's pound-denominated account at A will rise by €100,000.

---

Definitions:

Noncontrolling Interest

The portion of equity in a subsidiary not directly or indirectly owned by the parent company.

Cash Dividends

Dividends paid in the form of cash to a company's shareholders from its current or accumulated earnings.

Additional Paid-In Capital

The amount of money that shareholders have paid in excess of the par value of the shares, representing a source of non-debt based capital for the company.

Goodwill

A non-physical asset created when acquiring a business at a cost higher than the fair value of its identifiable net assets.