1

Banking Diploma Math Solution

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ

Email: [email protected]
www.bankingnewsbd.com

DEC 2013

You are requested by your customer to remit 12000 Pound to London by T. T. Using
the following data, please calculate your selling rate and the amount to be debited to
the customers' account:

(i) Exchange rates in the interbank market

Pound 1 = $ 1.1820 - 1.1740
$ 1 = Tk. 77.3080 - 77.2070
(ii) Banks Profit margin 1/16 %
(iii) Banks Swift Charges 1/32 %

Solution 10
*************
Pound 1 = Tk. 1.1820*77.3080 = Tk. 91.3781
Profit Margin = Tk. 91.3781*1/16% = Tk. 0.0571
Swift Charge = Tk. 91.3781*1/32% = Tk. 0.0286
Selling Rate, Pound 1=Tk. (91.3781+0.0571+0.0286)=Tk. 91.4638

Amount to be debited to the customer's account is

Tk.(12000*91.4638) = Tk. 10,97,565.60

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 2

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 3

December 2013.
********************
1$ = Tk. 77.2030 & 1 Euro = $ 1.2060
So, 1 Euro = Tk.(77.2030*1.2060) = Tk.93.1068
Total days = (90+10) = 100
Interest per Euro = Tk.(93.1068*6*100)/(360*100) = Tk. 1.5518
Profit margin per Euro = Tk. 0.15
Overhead Charge Per Euro = Tk.93.1068*1/16% = Tk.0.582
Total Exchange Margin per Euro = Tk. (1.5518+0.15+0.582) = Tk. 1.76
Exchange Rate, Euro 1 = Tk.(93.1068-1.76) = Tk. 91.3468

(Solution given by Monirul Haider Pinu)

or,

Alternate Result by Mr. Maniruzzaman Akhter Sujan

1$ = Tk. 77.2030 & 1 Euro = $ 1.2060

So, 1 Euro = Tk.(77.2030*1.2060) = Tk.93.1068
Total days = (90+10) = 100
Interest per Euro = Tk.(93.1068*6*100)/(360*100) = Tk. 1.5517
Profit margin per Euro = Tk. 0.15
Overhead Charge Per Euro = Tk.93.1068*1/16% = Tk0.0581
Total Exchange Margin per Euro = Tk. (1.5518+0.15+0.582) = Tk. 1.7598
Exchange Rate, Euro 1 = Tk.(93.1068-1.76) = Tk. 91.3470
(I was consideration Four(4) Digit without add one(1) from 5 digit when more than 5)

FX Math (Dec-13)

Solution 9:

1$ = Tk. 77.2030 & 1 Euro = $ 1.2060

So, 1 Euro = Tk.(77.2030*1.2060) = Tk.93.1068

Total days = (90+10) = 100

Interest per Euro = Tk.(93.1068*6*100)/(360*100) = Tk. 1.5518

Profit margin per Euro = Tk. 0.15

Overhead Charge Per Euro = Tk.93.1068*1/16% = Tk.0.582

Total Exchange Margin per Euro = Tk. (1.5518+0.15+0.582) = Tk. 1.76

Exchange Rate, Euro 1 = Tk.(93.1068-1.76) = Tk. 91.3468

(Solution given by Monirul Haider Pinu)

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 4

Question 10 Dec 13

You are requested by your customer to remit 12000 Pound to London by T. T. Using
the following data, please calculate your selling rate and the amount to be debited to
the customers' account:

(i) Exchange rates in the interbank market

Pound 1 = $ 1.1820 - 1.1740
$ 1 = Tk. 77.3080 - 77.2070
(ii) Banks Profit margin 1/16 %
(iii) Banks Swift Charges 1/32 %

Solution 10

Pound 1 = Tk. 1.1820*77.3080 = Tk. 91.3781

Profit Margin = Tk. 91.3781*1/16% = Tk. 0.0571
Swift Charge = Tk. 91.3781*1/32% = Tk. 0.0286
Selling Rate, Pound 1=Tk. (91.3781+0.0571+0.0286)=Tk. 91.4638

Amount to be debited to the customer's account is

Tk.(12000*91.4638) = Tk. 10,97,565.60

FX Math (June-14)

Solution 9:

Given That,
PS 1= US$ 1.4947-1.4957
US$ 1= Tk. 76.5070- 76.6070
Since, it is buy agreement, low rate will be realized-
So, PS 1= 1.4947*76.5080 = Tk. 114.356

We have,
120 days usance export bill and 10 days transit period.
So, Interest = (6*114.356*130)/(360*100) =89197.68/36000=2.477
Profit Margin= 114.356*1/100*16 =0.071
Postage SWIFT = 114.356*1/32*100 =0.035

So, Spot exchange rate= 114.356-2.477-0.071-0.035 =TK.111.773 (Ans.)

And, Amount to be Credited= 25,000*111.773= Tk.2,794,325 (Ans) .

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 5

Solution 10: (June-14)

Given That,

Euro 1= 1.1060-1.1080
USD 1= 76.2010-76.4020
Since, it is Sale deal, High rate will be realized
So, Euro 1 = 1.1080*76.4020 = 85.6534

The bill was negotiated abroad 10 days before, so, Interest = 10*15*85.6534/360*100
=0.3568

Profit Margin= 1*85.6534/100*15 =0.0571

Handling Charge=1*85.6534/100*20=0.0428
So the Exchange Rate= 85.6534+0.3568+0.0571+0.0428 =Tk 86.1101(Ans)

So, Amount to be debited= 25,000*86.1101 =Tk.2,152,652.50 (Ans)

FX Math (Nov-11)

Question 7:

A customer of your bank request to you to remit £1000 to London by TT. You are
required to work out the rate of exchange for this remittance using the following data:

i. Exchange rate in the interbank market:

US$1= Tk. 73.9020 -74.8030
£1= US$1.6150-1.6180
ii. The bank requires a profit margin of tk. 0.20 per pound sterling;
iii. The bank also loads SWIFT charges of 1/32 % per pound sterling.
Please also work out the amount to be realized from the customer for the remittance.

SOLUTION: 7

Given,
$ 1 = Tk. 73.9020 - 74.8030
£ 1 = $ 1.6150 - 1.6180

So, £ 1 = Tk. 73.9020×1.6150 - 74.8030×1.6180 = Tk. 119.3517 - 121.0313

Exchange Margin = Tk. 0.20

SWIFT Charges (1/32 %) = 121.0313 × 1/32 % = 0.0378

Required Rate, £ 1 = Tk. 121.0313 + 0.20 + 0.0378 = Tk. 121.2691

The required amount to be realized = 121.2691 × 1,000 = Tk. 1,21,269.10

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 6

Question 8: (Nov-11)

Please calculate the exchange rate by buying a 120 day usance bill in pound sterling
on the basis of the following parameters:

£1= US$1.4947-1.4957
US$1= Tk. 73.9020 -74.8030
Transit period 10 days
Rate of interest 10% per annum,
Profit Margin Tk. 0.10 per pound sterling
Assume 360 days a year.

SOLUTION: 8

Given,
$ 1 = Tk. 73.9020 - 74.8030
£ 1 = $ 1.4947 - 1.4957

So, £ 1 = Tk. 73.9020×1.4947 - 74.8030×1.4957 = Tk. 110.4613 - 111.8828

Interest Charges (10%) = 110.4613×.10×(130/360) = 3.9889

Profit Margin = 0.1000

Usance Rate, £ 1 = 110.4613 - 3.9889 - 0.1000 = Tk. 106.3724

Problem:
Please construct the forward buying rate of Pound Sterling for delivery in 3 months
using the following data:
a. Exchange rate in New York £1=$1.941-1.9846 (Spot)
b. 3 months forward margin 0.0314-0.0325 (premium)
c. Exchange rate in Dhaka $1=tk.68.45-69.45 (Spot)
d. You need a profit margin of 1/8 %.
Solution:
$1 = tk. 1.9841x68.4500 = tk. 135.81164

Now,
$1 = tk. 135.81164
Less: Forward margin = 0.0314
Profit margin = 0.1696 0.2010
Tk. 135.6106

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 7

FX Math (December-2012)

Question:

Please work out the exchange rate of your bank to buy an export bill for £10,000 on
the basis of the following data :

(i) Prevailing exchange rates :

£1= US$ 1.5650 - 1.5655
US$ = Tk 82.2800-82.2500
(ii) The bill is drawn on 60 days sight basis;
(iii) Interest rate 10% per annum;
(iv) Your bank's profit margin Tk 0.10 per £;
(v) Banks Overhead charge 1/32%;
(vi) Transit period 10 days.

SOLUTION:
There is a confusion regarding US$ rate in the question. Usually the 1st one (Buying
Rate) will be smaller than the 2nd one (Selling Rate). Here we assume that the smaller
(2nd one) is buying rate.

Given,
$ 1 = Tk. 82.2800 - 82.2500
£ 1 = $ 1.5650 - 1.5655
So, £ 1 = Tk. 82.25×1.5650 - 82.28×1.5655 = Tk. 128.7212 - 128.8093
Interest Charges (10%) = Tk. 128.7212×.10×(70/360) = 2.5029
Profit Margin = 0.1000
Overhead Charges = Tk. 128.7212×(1/32 %) = 0.0402
The Required Rate, £ 1 = 128.7212 - 2.5029 - 0.1000 - 0.0402 = Tk. 126.0781

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 8

Question: (December-2012)

Please calculate the exchange rate of your bank for remittance of Euro 10,000 by TT
to Paris by using the following data :
(i) Rate of exchange in the interbank market:
€ = US$ 1.2296-1.2294
$ = Tk 82.2800-82.2500
(ii) Your banks policy is to load a profit margin @1/16%
(iii) You may load SWIFT charges at the rate of 1/32%
Please also calculate the amount to be debited to the customer’s account.

SOLUTION:
There is a confusion regarding US$ rate and the Pound Rate in the question. Usually
the 1st one (Buying Rate) will be smaller than the 2nd one (Selling Rate). Here we
assume that the smaller (2nd one) is buying rate.

Given,
€ = US$ 1.2296-1.2294
$ = Tk 82.2800-82.2500
Assume the Rate of exchange in the interbank market:
€ = US$ 1.2294 - 1.2296
$ = Tk 82.2500 - 82.2800
So, € 1 = Tk. 82.25×1.2294 – 82.28×1.2296 = Tk. 101.1181 - 101.1714
Exchange Margin = Tk. 101.1714 × (1/16 %) = 0.0632
SWIFT Charges (1/32 %) = 101.1714 × (1/32 %) = 0.0316
Required Rate, £ 1 = Tk. 101.1714 + 0.0632 + 0.0316 = Tk. 101.2662
The required amount to be debited from customer’s account = Tk. 101.2662 × 10,000
= Tk. 10,12,662.00

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 9

UCPDC-600 Case Study (Nov-11)

The following are some of the problems normally encountered by banks in handling
letter of credit. How would you address these problems within the framework of
UCPDC-600? (5*4=20 marks)
a) Your exporter customer has submitted shipping documents for negotiations after
the last date of negotiation stipulated in the LC.
Solution : Article 16 Discrepant Documents, Waiver and Notice
a. the issuing bank may refuse to honour or negotiate.
c. must give a single notice to that effect to the presenter.
d. The notice must be given no later than the close of the fifth banking day following
the day of presentation.
e. may return the documents to the presenter at any time.
b) You receive a letter of credit from a foreign bank for advising to one of your
customers engaged in export trade but you are unable to verify the authenticity of the
credit.
Solution : Article 9 Advising of Credits and Amendments
f. If a bank is requested to advise a credit or amendment but cannot satisfy itself as to
the apparent authenticity of the credit, the amendment or the advice,
- it must so inform, without delay, the bank from which the instructions appear to
have been received.
- If the advising bank or second advising bank elects nonetheless to advise the credit
or amendment, it must inform the beneficiary or second advising bank that it has not
been able to satisfy itself as to the apparent authenticity of the credit, the amendment
or the advice.
c) You are asked by your foreign correspondents to advise a credit to your customer.
The customer wants you to add your confirmation to the credit although the opening
bank has not specifically asked you to do so.
Solution : Article 8 Confirming Bank Undertaking
d. If a bank is authorized or requested by the issuing bank to confirm a credit but is
not prepared to do so,
- it must inform the issuing bank without delay and may advise the credit without
confirmation.
d) Your bank has received an amendment advice from the letter of credit issuing bank
for advising it to the beneficiary. You find from your record that the original letter of
credit was advised through another bank, not your bank.
Solution : Article 9 Advising of Credits and Amendments
e. If a bank is requested to advise a credit or amendment but elects not to do so,
- it must so inform, without delay, the bank from which the credit, amendment or
advice has been received.

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 10

Ques: 6: MAY 2012

Q: An Export – orient woven garment industry… CASE STUDY (a-f)
Solutions:

a) This is permitted. It can be done later by amendment if agreed by issuing bank,

confirming bank (if any) and beneficiary.

b) This clause has no option to be deemed. According to UCPDC Bill of Lading

should be in favor of Issuing Bank and documents cannot send directly to the
importer.

c) While opening a BTB LC by keeping lien the Master LC we can invest 75-80% of
the FOB value. In order to ensure the proper use of invested amount we can’t invest
95 % Value. If any case we have to disburse 95 % then we would take collateral
security for the exceed portion.

d) The main purpose of packing credit loan to assist exporter to finance packing and
dispatching of goods cost. If it disburse before coming the raw materials the proper
usage of the loan may be violated. So we would encourage the importer to take the PC
while it actually needed.

e) If the buyer failed to shipment within the stipulated date, then bank would take
according to rules and regulation take step to recover the investment amount. This can
be recover through collateral security.

f) As we already accepted the said documents we have to honor the Bill of Exchange
as per UCPDC-600.

'Consular Invoice'

A document certifying a shipment of goods and shows information such as the

consignor, consignee and value of the shipment. A consular invoice can be obtained
through a consular representative of the country you're shipping to. The consular
invoice is required by some countries to facilitate customs and collection of taxes.

A consular invoice also has a copy of the commercial invoice in the language of the
country, giving full details of the merchandise shipped. In general, the purpose is to
provide the foreign customs authority with a complete, detailed description of the
goods so that the correct import duty can be levied.

A consular invoice is a legal document signed and sealed by a consul of the

importing country. The invoice contains information on consignor, consignee and
worth of the consignment. The document is meant to build trust between a buyer and
the seller and to reduce possibility of the exporter overcharging importer.

What is a Value Date?

A Value Date, or maturity date is the date on which counterparties to a financial

transaction agree to settle their respective obligations by exchanging payments and
ownership rights. The typical Value Date for a Spot forex trade is two business days.
Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com
 11

A Spot Trade in Forex is a purchase or sale of a foreign currency in the Spot Market
at the Spot Rate for immediate delivery or delivery "on the spot", as opposed to a date
in the future. Spot contracts are typically cleared and settled electronically. A Spot
Trade in foreign currencies is typically transacted with a "2-day value date", an
international convention due to time zone differences and the need for banks to
communicate cross-border to perform the transaction. Occasionally a "1-day value
date" can be achieved when the complete trade is near or within the same time zone,
as with USD trades for the Canadian Dollar of the Mexican Peso. If a position is left
open overnight, a forex broker will typically reset the value date two business days
out by closing and reopening the position at the same price, thereby preventing the
actual delivery of currency to take place. The Spot Market accounts for nearly 35% of
the total volume exchanged on the foreign exchange market.

Charter-party

Charter party (Latin: charta partita; a legal paper or instrument, divided, i.e. written in
duplicate so that each party retains half), a written, or partly written and partly
printed, contract between a shipowner and a merchant, by which a ship is let or hired
for the conveyance of goods on a specified voyage, or for a defined period. A vessel
might also be chartered to carry passengers on a journey. Also, a written contract
between shipowner and charterer whereby a ship is hired; all terms, conditions and
exceptions are stated in the contract or incorporated by reference.

A charter party is the contract between the owner of a vessel and the charterer for
the use of a vessel. The charterer takes over the vessel for either a certain amount of
time (a time charter) or for a certain point-to-point voyage (a voyage charter),
giving rise to these two main types of charter agreement. There is a subtype of time
charter called the demise or bareboat charter.

In a time charter, the vessel is hired for a specific amount of time. The owner still
manages the vessel but the charterer gives orders for the employment of the vessel,
and may sub-charter the vessel on a time charter or voyage charter basis.

The demise or bareboat charter is a subtype of time charter in which the charterer
takes responsibility for the crewing and maintenance of the ship during the time of
the charter, assuming the legal responsibilities of the owner and is known as a
disponent owner.

In a voyage charter, the charterer hires the vessel for a single voyage, and the
vessel's owner (or disponent owner) provides the master, crew, bunkers and
supplies.

'Open Position':

In investing, any trade that has been established, or entered, that has yet to be closed
with an opposing trade. An open position can exist following a buy (long) position,
or a sell (short) position. In either case, the position will remain open until an
opposing trade has taken place.
for example, an investor who owns 500 shares of a certain stock is said to have an
open position in that stock. When the investor sells those 500 shares, the position will

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com

 12

be closed.

Buy-and-hold investors generally have one or more open positions at any given time.
Short-term traders may execute "round-trip" trades; a position is opened and closed
within a relatively short period of time. Day traders and scalpers may even open and
close a position within a few seconds, trying the catch very small, but frequent, price
movements throughout the day.

What is the WTO?

The World Trade Organization (WTO) is the only global international organization
dealing with the rules of trade between nations. At its heart are the WTO agreements,
negotiated and signed by the bulk of the world’s trading nations and ratified in their
parliaments. The goal is to help producers of goods and services, exporters, and
importers conduct their business.

function of WTO?

The WTO is run by its member governments. All major decisions are made by the
membership as a whole, either by ministers (who usually meet at least once every
two years) or by their ambassadors or delegates (who meet regularly in Geneva).

While the WTO is driven by its member states, it could not function without its
Secretariat to coordinate the activities. The Secretariat employs over 600 staff,
and its experts — lawyers, economists, statisticians and communications experts
— assist WTO members on a daily basis to ensure, among other things, that
negotiations progress smoothly, and that the rules of international trade are
correctly applied and enforced.

Trade negotiations

The WTO agreements cover goods, services and intellectual property. They spell out
the principles of liberalization, and the permitted exceptions. They include individual
countries’ commitments to lower customs tariffs and other trade barriers, and to
open and keep open services markets. They set procedures for settling disputes.
These agreements are not static; they are renegotiated from time to time and new
agreements can be added to the package.

Implementation and monitoring

WTO agreements require governments to make their trade policies transparent by

notifying the WTO about laws in force and measures adopted. Various WTO councils
and committees seek to ensure that these requirements are being followed and that
WTO agreements are being properly implemented. All WTO members must undergo
periodic scrutiny of their trade policies and practices, each review containing reports by
the country concerned and the WTO Secretariat.

Dispute settlement

The WTO’s procedure for resolving trade quarrels under the Dispute Settlement
Understanding is vital for enforcing the rules and therefore for ensuring that trade
Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com
 13

flows smoothly. Countries bring disputes to the WTO if they think their rights under
the agreements are being infringed. Judgements by specially appointed independent
experts are based on interpretations of the agreements and individual countries’
commitments.

Building trade capacity

WTO agreements contain special provision for developing countries, including

longer time periods to implement agreements and commitments, measures to increase
their trading opportunities, and support to help them build their trade capacity, to
handle disputes and to implement technical standards. The WTO organizes hundreds
of technical cooperation missions to developing countries annually. It also holds
numerous courses each year in Geneva for government officials. Aid for Trade aims
to help developing countries develop the skills and infrastructure needed to expand
their trade.

Outreach

The WTO maintains regular dialogue with non-governmental organizations,

parliamentarians, other international organizations, the media and the general public
on various aspects of the WTO and the ongoing Doha negotiations, with the aim of
enhancing cooperation and increasing awareness of WTO activities.

Objectives and operation

The WTO has six key objectives: (1) to set and enforce rules for international trade,
(2) to provide a forum for negotiating and monitoring further trade liberalization,
(3) to resolve trade disputes,
(4) to increase the transparency of decision-making processes,
(5) to cooperate with other major international economic institutions involved in
global economic management, and
(6) to help developing countries benefit fully from the global trading system.

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ Email: [email protected] www.bankingnewsbd.com