Consider the balance sheets of Bank A and BankB. Bank A is in Milan, Bank B is in New York. The current exchange rate is €1.00 = $1.25. Show the correct balances in each account if a currency trader employed at Bank A buys €100,000 from a currency trader at Bank B for $125,000 using its correspondent relationship with BankB. 
Definitions:
Implied Warranty
A legal guarantee that a product will meet a minimum set of standards of quality and functionality without being explicitly stated.
Breach of Contract
The failure to perform as stated or agreed upon in a contract.
Agency
A legal and business relationship in which one party, the agent, is authorized to act on behalf of another party, the principal, in transactions with third parties.
Principal
In finance, refers to the original sum of money borrowed in a loan, or put into an investment, not including the interest. In a second context, it can refer to the primary party involved in a transaction or the main individual in a business.
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