Topic 8: Using money abroad and foreign exchange calculations

Question 1

What is a currency?

Answer 1

A currency is a unit of money used by all of the people within a country to buy and sell goods and services, to save and to borrow. It is the money that circulates among the people in that country, and it measures the value of everything that they earn and own.

Question 2

What does each country have different with their currency?

Answer 2

Each country’s currency has a different name, symbol and value.

Question 3

What is the euro?

Answer 3

The euro is the legal tender currency using in 17 of the 27 countries that make up the European Union.

Question 4

What are pounds otherwise known as?

Answer 4

“sterling”

Question 5

What is the currency used in the USA?

Answer 5

The currency in the USA, is the US dollar. The sign for a dollar is “$”.

Question 6

What is the pound sterling?

Answer 6

The pound sterling is the official name for the British pound.

Question 7

Where is the pound sterling used?

Answer 7

The pound sterling is the currency of the UK, Gersey, Guernsey and the Isle of Man.

Question 8

What is the exchange rate?

Answer 8

The exchange rate is the price for buying or selling the different currencies.

Question 9

What does the exchange rate between 2 currencies depend on?

Answer 9

The exchange rate between 2 currencies depends on how many people are buying and selling them.

Question 10

What do popular currencies have?

Answer 10

Popular currencies have a high exchange rate so therefore not-so-popular currencies have a low exchange rate.

Question 11

How do you calculate the price of buying a certain countries currency? (equation)

Answer 11

Amount of sterling x exchange rate = price of buying the currency

Question 12

What happens if you have currency left over after your trip abroad and you want to swap it back to sterling?

Answer 12

If you have currency left over after your trip abroad and want to swap it back to sterling, you will take it to the bank and ask the bank to buy the currency back from you.

Question 13

What is a £1 in euros?

Answer 13

£1 = 1.16 euros

Question 14

What is a £1 in US dollars?

Answer 14

£1 = US$1.45

Question 15

How do banks make money out of foreign exchange?

Answer 15

Charging a different exchange rate for buying and selling a particular currency is how the banks make money out of foreign exchange.

Question 16

How can commission be charged?

Answer 16

Commission can be charged when you change currencies and this reduces the amount of money hat you get.

Question 17

Why do you have to be careful of bureau de change kiosks abroad?

Answer 17

Because they usually charge high commission.

Question 18

What are 3 main ways of making sure that you will have the local currency to spend when you arrive?

Answer 18

• buy notes and coins in that currency
• buy travellers’ cheques
• use a plastic card when you are abroad

Question 19

Where can you buy most major foreign currencies?

Answer 19

At a bank, at a main Post Office, at some large shops or at money-exchanging offices.

Question 20

What are travellers’ cheques?

Answer 20

Travellers’ cheques are pieces of paper that are worth specific given amounts. They are issued in your name and each cheque has an individual serial number.

Question 21

What do you do with travellers’ cheques?

Answer 21

Once you have arrived at your destination, you can exchange them at banks or at your hotel for the local currency equivalent of the value of each cheque.

Question 22

Why are travellers’ cheques safer?

Answer 22

Travellers’ cheques are safer because if you lose them or they are stolen, you can report the numbers of the missing cheques and they will be cancelled.

Question 23

Where can you exchange money abroad?

Answer 23

It is best to find a bank or a foreign exchange office.

Question 24

What does the French name ‘bureau de change’ mean?

Answer 24

The name ‘bureau de change’ is used to describe a place where you can exchange money.

Question 25

Can you use your debit card abroad?

Answer 25

Yes, you can use your debit card abroad at automated teller machines (ATMs) and in shops and hotels.

Question 26

How can you use debit cards abroad?

Answer 26

You will need to match up the symbol on your card with the ATM or the information in the shop. The symbols to look out for are Cirrus, Mastercard or Visa. You will use the card with your PIN as usual and the amount that you spend will be converted into sterling which it is debited in your bank account.

Question 27

Can you use your credit card abroad?

Answer 27

Yes, if you have a credit card, you can use it anywhere just as long as it shows the symbols for Mastercard or Visa.

Question 28

How can you use credit cards abroad?

Answer 28

You will use it the same way you’d use a credit card in the UK and any amounts that you spend will be included in your next credit card statement. The amount in currency will have been converted into sterling by the credit card company.

Question 29

What is a prepaid cash card?

Answer 29

A prepaid cash card is a card that is pre-loaded with card and then used to withdraw the money at an ATM or to make purchases. One call of the pre-loaded money has been spent or withdrawn, the card can’t be used again until more money is loaded onto it.

Question 30

Why are prepaid cash cards a good idea for holidays?

Answer 30

Prepaid cash cards are a good idea for holidays because it means that you do not have to carry currency around.