Reading 18: Currency Exchange Rates-LOS c习题精选 div, interpret, class, involving, currency

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Session 4: Economics: Economics for Valuation
Reading 18: Currency Exchange Rates

LOS c: Calculate and interpret currency cross rates, given two spot exchange quotations involving three currencies.

 

 

 

Given an exchange rate of 0.9250 USD/CAD and 1.6250 USD/SF what is exchange rate quoted in CAD/SF?

A) 0.5692.

B) 1.5032.

C) 1.7568.

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Given an exchange rate of 0.9250 USD/CAD and 1.6250 USD/SF what is exchange rate quoted in CAD/SF?

A) 0.5692.

B) 1.5032.

C) 1.7568.

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(1.6250 USD/SF) / (0.9250 USD/CAD) = 1.7568 CAD/SF

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Given P the direct quotes in U.S. dollars for the Mexican peso (MXN) and the Peruvian nuevo sol (PEN), determine the MXN/PEN bid-ask cross rates. Select the closest correct answer.

USD/MXN Bid/Ask: 0.11001 - 0.11036

USD/PEN Bid/Ask: 0.28818 - 0.28918

A) MXN/PEN 2.62890 - 2.64630

B) MXN/PEN 0.38300 - 0.38554

C) MXN/PEN 2.61127 - 2.62867

土豆妮

 

Given P the direct quotes in U.S. dollars for the Mexican peso (MXN) and the Peruvian nuevo sol (PEN), determine the MXN/PEN bid-ask cross rates. Select the closest correct answer.

USD/MXN Bid/Ask: 0.11001 - 0.11036

USD/PEN Bid/Ask: 0.28818 - 0.28918

A) MXN/PEN 2.62890 - 2.64630

B) MXN/PEN 0.38300 - 0.38554

C) MXN/PEN 2.61127 - 2.62867

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We recommend using the following "Bid-Ask Matrix Method" to calculate the bid and ask quotes:

Step 1: Put the bid-ask quotes into a matrix. Use direct quotes in the common currency.

Currency	Bid	Ask
MXN	0.11001	0.11036
PEN	0.28818	0.28918

Step 2: "Divide Out" the diagonals and take the reciprocal. Remember that the quotes are direct quotes for a USD investor.

(Remember to put MXN in the numerator - because MXN is in the numerator of the quote we are asked to calculate.)

MXN_Bid / PEN_Ask = 0.11001 USD/MXN / 0.28918 USD/PEN = 0.38042 PEN/MXN,

1 / 0.38042 PEN/MXN = 2.62867 MXN/PEN

MXN_Ask / PEN_Bid = 0.11036 USD/MXN / 0.28818 USD/PEN = 0.38296 MXN/PEN,

1 / 0.38296 PEN/MXN = 2.61127 MXN/PEN

Step 3: Quote : The MXN/PEN Bid-Ask is:

(Note: The lower number from Step 2 is the bid, the higher number is the ask.)

MXN/PEN 2.61127 to 2.62867

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Given the following quotes: 2.00 GBP/USD and 8.00 Pesos/USD, calculate the direct Pesos/GBP spot cross exchange rate.

A) 0.625.

B) 0.250.

C) 4.000.

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Given the following quotes: 2.00 GBP/USD and 8.00 Pesos/USD, calculate the direct Pesos/GBP spot cross exchange rate.

A) 0.625.

B) 0.250.

C) 4.000.

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The direct method of quoting currencies is domestic currency / foreign currency or GBP/Pesos. You need to calculate what one peso is worth in pounds, 8 / 2 = 4.

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A bank in Canada is quoting CAD/USD bid 1.4950 ? ask 1.5005, and USD/EUR bid 0.9350 ? ask 0.9400. What is exchange rate bid and ask for CAD/EUR?

A) CAD/EUR bid 1.3978 ? ask 1.4105.

B) CAD/EUR bid 1.5904 ? ask 1.6048.

C) CAD/EUR bid 0.6254 ? ask 0.6264.

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A bank in Canada is quoting CAD/USD bid 1.4950 ? ask 1.5005, and USD/EUR bid 0.9350 ? ask 0.9400. What is exchange rate bid and ask for CAD/EUR?

A) CAD/EUR bid 1.3978 ? ask 1.4105.

B) CAD/EUR bid 1.5904 ? ask 1.6048.

C) CAD/EUR bid 0.6254 ? ask 0.6264.

First invert the USD/EUR quote by 1 / 0.9350 = 1.0695 and 1 / 0.9400 = 1.0638 for a EUR/USD bid-ask spread of 1.0638 ? 1.0695 EUR/USD. Then set up a bid-ask matrix.

1.4950 / 1.0695 = 1.3978 CAD/EUR

1.5005 / 1.0638 = 1.4105 CAD/EUR

The CAD/EUR bid-ask spread is 1.3978 ? 1.4105

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Given the following quotes for the Canadian dollar (CAD) and the British pound (BP), determine the CAD/BP bid-ask spread. (Note: Carry calculations to at least five decimal places)

CAD/$ Bid Ask 1.59031 ? 1.59701 / CAD/$
BP/$ Bid Ask 0.69459 ? 0.69686 / BP/$

A) 2.28211 ? 2.29921 CAD/BP.

B) 2.29921 ? 2.31631 CAD/BP.

C) 2.28957 ? 3.28863 CAD/BP.

土豆妮

 

Given the following quotes for the Canadian dollar (CAD) and the British pound (BP), determine the CAD/BP bid-ask spread. (Note: Carry calculations to at least five decimal places)

CAD/$ Bid Ask 1.59031 ? 1.59701 / CAD/$
BP/$ Bid Ask 0.69459 ? 0.69686 / BP/$

A) 2.28211 ? 2.29921 CAD/BP.

B) 2.29921 ? 2.31631 CAD/BP.

C) 2.28957 ? 3.28863 CAD/BP.

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We recommend using the following "Bid-Ask Matrix Method" to calculate the bid and ask quotes:

Step 1: Put the bid-ask quotes into a matrix as below:

Currency	Bid	Ask
CAD/$	1.59031	1.59701
BP/$	0.69459	0.69686

Step 2: “Divide Out” the diagonals.(Remember to put CAD in the numerator - because CAD is in the numerator of the quote we are asked to calculate.)

CAD_Bid / BP_Ask = 1.59031 CAD/$ / 0.69686 BP/$ = 2.28211 CAD/BP_Bid

CAD_Ask / BP_Bid = 1.59701 CAD/$ / 0.69459 BP/$ = 2.29921 CAD/BP_Ask