Hi EVOKE friends!
Today I went to my local shopping center to a store called "Continental Currency Exchange" to exchange 5 Canadian dollars to Euros. The only drawback was the store did not carry coins, their smallest amount was 5 Euros, it was a good thing they had an interact machine! Nonetheless, I put away my five dollar bill and used my debit card to finalize the currency exchange. It cost me $7.33 CDN to receive 5 Euros. I then asked the employee how the rates were set. She responded by telling me that the banks set their own rates while companies like Continental Currency Exchange set their rates based on the stock market rates, so you can imagine the competition that goes on between banks and other foreign currency exchange companies. Then I left the store with one final question, I asked her if I were to change five euros to Canadian dollars how much would I get? She replied "$6.78". Therefore they made a profit of fifty-five cents, now this may not seem like a lot of money, but imagine the store receiving a steady flow of costumers each day or better yet trading in the millions of dollars over a year. At 55 cents on 5 dollars that is a profit of 11%. For example if they traded 1 million dollars in a given period they would realize a profit of 110,000 dollars, it all adds up! The difference of fifty-five cents is called the spread. Watch the link below to see how the exchange was done!
Currency Exchange
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