Question

You want to buy HKD 20,000 and GBP 2,500. You receive the following quotations: HKD1: USD 0.1282-95 GBP1: USD 1.4561-70 How much USD in all will you have pay

Answer 1

	Information provided
	HKD1: USD		0.1282-95
	GBP1: USD		1.4561-70
	Required to purchase
	HKD		20000
	GBP		2500
	Answer
	These are direct quotes as Value of home currency is given for one unit of foreign currency.
	There are two rates Bid Rate and Ask Rate.
	Bid rate	Rate at which bank buy left hand currency
	Ask Rate	Rate at which bank sell left hand currency
	Ask Rate will always be hire than Bid Rate.
	To Purchase
	HKD		20000
	HKD1: USD		0.1282-95
	or		HKD	HKD
	1 USD		1/0.1282	1/0.1295
=	1 USD		7.80	7.72
	As we are selling USD and purchasing HKD.
	And rule is
	Ask Rate will always be hire than Bid Rate.
	Hence
	Bid rate	We purchase 1 Dollar Against 7.8 HKD.
		or
		Bank will sell HKD for 0 .1295 USD.
	Ask rate	we sell 1 dollar & receive 7.72 HKD
		or
		Bank will Purchase HKD for 0.1282 USD.
	for 20000 HKD		20000/7.72
	Dollar required	(i)	2,590.67
	To Purchase
	GBP		2500
	GBP1: USD		1.4561-70
	or		GBP	GBP
	1 USD		1/1.4561	1/1.4570
=	1 USD		0.6868	0.6863
	As we are selling USD and purchasing GBP.
	And rule is
	Ask Rate will always be hire than Bid Rate.
	For 2500 GBP		2500/0.6863
	Dollar required	(ii)	3,642.72
Total Dollar Required		(iii)=(i)+(ii)	6,233.40