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16 March, 19:08

Caterpillar tractors are made in the US. If Tractors Ltd., a company in Britain, wants to buy a tractor, it must pay for it in US dollars ($). But Britain's currency is the pound sterling (£). How would the British company complete the sale?

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  1. 16 March, 19:16
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    Tractors Ltd. would pay an exchange fee to buy dollars with their pounds.

    Explanation:

    Foreign exchange involves the exchange of one currency for another during a transaction between two countries with different currencies.

    In international trade a country like Britain for example will have to exchange it's currency (pound) for the dollar in order to complete the transaction that is in dollar.

    This exchange usually attracts a conversion fee that is paid by the buyer in this transaction.
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