TAILIEUCHUNG - Lecture Global financial management - Topic 8: Retail foreign exchange transactions: bid-ask, credit and debit transactions

Topic 8 - Retail foreign exchange transactions: bid-ask, credit and debit transactions. In this chapter, students will be able to understand convert currencies using bid and ask quotations; calculate the total cost of using cash, credit or debit in forex transactions. | Topic #8: Retail Foreign Exchange Transactions: Bid-Ask, Credit and Debit Transactions L. Gattis The Pennsylvania State University Global Finance 1 Before class: Call your credit and ATM card issuers and ask them to list the fees for foreign ATM withdrawal or Credit Card purchase For Credit Card: fees may include issuer fee % and Visa/MC fee% For Debit Card: fees may include ATM fee, Foreign ATM fee, 1-3% foreign transaction cost Learning Objectives 2 convert currencies using bid and ask quotations calculate the total cost of using cash, credit or debit in forex transactions Retail Bid – Ask Exchange Rates (2/29/16) 3 Currency offices at the airport use one exchange rate for buying and one for selling. Listed below are the Travelex USD rates on 2/29/16. Travelex will buy (customer sells) the denominator currency at the low (bid) price and sell the denominator currency at the high (ask) price. In addition, there is a $ processing charge. Euro $€ – $€ Brazilian Real R$$ – R$$ Customer buys euros (selling dollars) at this price Customer buys dollars (selling reais) at this price Direct Retail Bid-Ask Quotations 4 How many euros can you buy for $100? Since you are buying euros and selling dollar – use ASK $100 x ASK (1€/$) = € Alternative rule: Customer always loses – gets less, pays more $100 x “Lowest €/$ Rate” (1 / High ) = € The total cost of € is $100 + $ fee = $ for an effective “all in” exchange rate of $€ = $ Bid $€ – Ask $€ Customer Price to Sell € (Buy $) Customer Price to Buy € (Sell $) Bid (Low) Price of € Ask (High) Price of € Direct Retail Bid-Ask Quotations 5 How much will it cost to buy €100? Since you are buying euros and selling dollar – use ASK €100 x ASK ($€) = $ Alternative rule: Customer always loses – gets less, pays more €100 x “Highest $/€ Rate” $ = $ The total cost of €100 is $ + $ fee = $ for .

• Tài chính doanh nghiệp
• Global finance
• Global financial management
• Lecture Global financial management
• Retail foreign exchange transactions
• Debit transactions
• Retail bid
• Global valuation
• Capital budgeting
• Capital budgeting formulas
• Global Corporate Finance
• Global financial problems
• Corporate governance global
• 26 new case studies
• Text emphasizes shareholder
• Domestic capital budgeting
• Free cash flows
• Cost of capital
• Managing country risk
• Country risk
• Country risk analysis
• Foreign exchange rate systems
• Exchange rates
• Benefits of systems
• Indirect prices
• Obtaining exchange rates
• Foreign exchange
• Foreign exchange risks
• Translation exposure
• Competitive exposure
• Real currency appreciation