Material Taken From: Mathematics for the international student Mathematical Studies SL Mal Coad, Glen Whiffen, John Owen, Robert Haese, Sandra Haese and Mark Bruce Haese and Haese Publications, 2004 AND Mathematical Studies Standard Level Peter Blythe, Jim Fensom, Jane Forrest and Paula Waldman de Tokman Oxford University Press, 2012

Section 13A - Foreign Exchange

Note on Exchange Rates Two Types of Exchange Rates: – Selling Rate – If you live in China and are going on vacation in the USA then the bank will sell you US dollars (USD) at a certain rate. – Buying Rate – When you return from your vacation a bank will buy back the dollars you have left and give you RMB in return.

Note on Commissions Banks and other currency traders can earn a commission for exchanging currency. It can be performed as a: commission rate usually between 0.5% to 3% ‘flat fee’ Banks and other currency traders that do not charge a commission usually have poorer exchange rates.

Calculating Converions To change one currency to another either multiple the amount by the appropriate exchange rate (if the bank is buying) or divide the amount by the appropriate exchange rate (if the bank is selling). If the bank charges a commission, calculate this first and subtract it from the amount before you change currency.

A bank exchanges 1 British pound (GBP) for 1.9 Australian dollars (AUD). Convert: a) 40 GBP to AUD b) 500 AUD to GBP 76 AUD GBP

A bank changes US dollars to other currency at a fixed commission of 1.5%. Max wishes to convert $200 US to baht where $1 US buys Thai baht. a)What commission is charged? b)What does the customer receive? $197 x baht = 7925 baht

A currency exchange service exchanges 1 euro for Japanese yen with the buy rate , and sell rate Cedric wishes to exchange 800 Euros for yen. a)How many yen will he receive? b)If the yen in a were exchanged immediately back to Euros, how many Euros would they be worth? c)What is the resultant commission on the double transaction? The service buys yen at The service sells yen at x = yen 800 – 779 = 21 euro commission