Reading 18- LOS c ～ Q1－5 exchange, black

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

A)   1.7568.

B)   1.5032.

C)   1.6535.

D)   0.5692.

2.A Mexican dealer gives a quote of 8.00 bid / 8.10 ask (MXN/USD) and a London dealer quotes the U.S. dollar at 2.00 bid / 2.1 ask (GBP/USD). What is the MXN/GBP bid and ask from the perspective of a Mexican dealer?

A)   4.00 - 4.05.

B)   3.81 - 3.86.

C)   2.47 - 2.63.

D)   3.81 - 4.05.

3.The Japanese yen is trading at 115.2200 ¥/$ and the Danish krone (DKK) is trading at 16.4989 ¥/DKK. The $/DKK exchange rate is:

A)   0.1432 $/DKK.

B)   6.9835 $/DKK.

C)   1.9010 $/DKK.

D)   0.5260 $/DKK.

4.If the spot exchange rate between the British pound and the U.S. dollar is 0.7775 ₤/$, and the spot exchange rate between the Canadian dollar and the British pound is 1.8325 CAD/₤, what is the U.S. dollar/Canadian dollar spot cross exchange rate?

A)   0.42428.

B)   1.42477.

C)   0.70186.

D)   2.35691.

5.If the CAD is trading at 0.6403 USD/CAD and the GBP is trading 2.5207 CAD/GBP, the USD/GBP exchange rate is:

A)   1.6140 USD/GBP.

B)   0.6196 USD/GBP

C)   3.1610 USD/GBP.

D)   3.9367 USD/GBP.

 

 

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

A)   1.7568.

B)   1.5032.

C)   1.6535.

D)   0.5692.

The correct answer was A)

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

2.A Mexican dealer gives a quote of 8.00 bid / 8.10 ask (MXN/USD) and a London dealer quotes the U.S. dollar at 2.00 bid / 2.1 ask (GBP/USD). What is the MXN/GBP bid and ask from the perspective of a Mexican dealer?

A)   4.00 - 4.05.

B)   3.81 - 3.86.

C)   2.47 - 2.63.

D)   3.81 - 4.05.

The correct answer was D)

This result is determined as follows:

Step 1: Invert GBP quote.

First, we need to invert the GBP quotes to make the currency units USD/GBP. Then, when we multiply by the MXN/USD quote we will have the correct MXN/GBP units. (Remember that when you take the reciprocal of a quote, the bid becomes the ask and vice versa. So, for the bid we take the given ask)

Bid: 1.00000 / 2.10000_GBP/USD = 0.47619_USD/GBP

Ask: 1.00000 / 2.00000_GBP/USD = 0.50000_USD/GBP

Step 2: Calculate MXN/GBP bid-ask Prices.

Bid: 8.00000_MXN/USD × 0.47619_USD/GBP = 3.80952_MXN/GBP, or 3.81_MXN/GBP.

Ask: 8.10000_MXN/USD × 0.50000_USD/GBP = 4.05000_MXN/GBP, or 4.05_MXN/GBP.

Thus, the MXN/GBP bid-ask is: 3.81_MXN/GBP - 4.05_MXN/GBP.

3.The Japanese yen is trading at 115.2200 ¥/$ and the Danish krone (DKK) is trading at 16.4989 ¥/DKK. The $/DKK exchange rate is:

A)   0.1432 $/DKK.

B)   6.9835 $/DKK.

C)   1.9010 $/DKK.

D)   0.5260 $/DKK.

The correct answer was A)

The cross rate between $ and DKK is calculated in the following manner:

$/¥ x ¥/DKK = (1/115.2200) x 16.4989 = 0.1432 $/DKK (the Yen cancels out.)

4.If the spot exchange rate between the British pound and the U.S. dollar is 0.7775 ₤/$, and the spot exchange rate between the Canadian dollar and the British pound is 1.8325 CAD/₤, what is the U.S. dollar/Canadian dollar spot cross exchange rate?

A)   0.42428.

B)   1.42477.

C)   0.70186.

D)   2.35691.

The correct answer was C)

First convert 0.7775 ₤/$ to 1/0.7775 = 1.28617 $/₤.

Then divide 1.28617 $/₤ by 1.8325 CAD/₤ = 0.70187 $/CAD

5.If the CAD is trading at 0.6403 USD/CAD and the GBP is trading 2.5207 CAD/GBP, the USD/GBP exchange rate is:

A)   1.6140 USD/GBP.

B)   0.6196 USD/GBP

C)   3.1610 USD/GBP.

D)   3.9367 USD/GBP.

The correct answer was A)

(0.643USD/CAD)*(2.5207CAD/GBP) = 1.6140 USD/GBP.