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Real-Life Activities

Real-Life Decision Making -- Solution

You decide to sell the currency to the client for 0.013725 and make some money on the deal.

Your rationale is that you will be undercutting the bank, yet making a profit since you bought the currency last week for 0.011964.

The client, however, later finds out that the bank had also bought yen at the lower rate -- a savings it was prepared to pass along to him as a long-time customer. That means he would have received a better rate of exchange by dealing with the bank. As a result, he decides to buy all of his currency from the bank in the future.