Question

There is a buy rate (probably for question a.) sell rate (for b.) and exchange rate.

8. A bank of Calgary has the following buy and sell rates against Canadian dollars: Country Buy Rate Sell Rate Currency name Brazil 0.3615 reals 0.4290 a. Calculate the cost of purchasing 500 Brazilian reals based on the exchange rate R$1-C$0.3927. b. Calculate the bank's commission amount in CAD and their rate of commission (%) to sell 500 Brazilian reals.

Answer 1

First of all, the buy rate and the sell rate are from the perspective of the dealer which in this case is the bank. So the buy rate and the sell rate are explained below:

• The bank will buy 1 unit of brazilian real for Canadian dollars 0.3615 and
• The bank will sell 1 unit of brazilian real for Canadian dollars 0.4290

Now we need to buy 500 reals therefore the bank has to sell them, so the cost of buying 500 real from the bank would be 500 x 0.4290 = Canadian Dollars 214.5

Now the Exchange rate per Brazillian real is Canadian Dollars 0.3927 i.e this is the rate when we don't buy from middlemen like the dealer or the bank. So using the exchange rate the cost of buying 500 real from the bank would be 500 x 0.3927 = Canadian Dollars 196.35

So the commission of the bank is 214.5-196.35 = 18.15

Commission percentage will be 18.15/196.35 x 100 = 9.24%