The transaction in which the bank receives foreign currency from the customer and pays him in local currency is a –Select one:a.Purchase transactionb.Sale transactionc.Direct transactiond.Indirect transaction
Question
The transaction in which the bank receives foreign currency from the customer and pays him in local currency is a –Select one:a.Purchase transactionb.Sale transactionc.Direct transactiond.Indirect transaction
Solution
The transaction in which the bank receives foreign currency from the customer and pays him in local currency is a Purchase transaction.
Here's why:
In the context of foreign exchange, a purchase transaction for a bank means that it is buying foreign currency. In this case, the customer is giving (selling) foreign currency to the bank, and the bank is giving (buying) local currency to the customer. Therefore, from the bank's perspective, this is a Purchase transaction.
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