firat

I had to explain this type of problem in my study group yesterday. The book provides a great way to simplify all the cross rate problems in 2 steps:

1) Determine your common currency then form the problem so that it eliminates it

Example:
USD:Sfr = 2-3
USD:￥ = 100-150
Solve for SFr:￥

Solution:
USD is the common currency
We want Sfr in the numerator and ￥ in the denominator
So,
(USD:￥)/(USD:SFr) = (SFr/USD) * (USD/￥) = SFr/￥

2) Remember your Bid is the smallest possible number (and your ask is the largest possible
number.

Lets solve for the bid:
To get the smallest value, we need to have the smaller number in the numerator and the
larger in the denominator. Remember: ￥ is ultimately our denominator. Don't get confused!
Formula: (USD:￥)/(USD:SFr) - NOTE: We discovered this in step 1

SFr:￥ (bid) = (USD:￥)/(USD:Sfr) = 100/3 = 33.33

Try working through the problem for the ask. Remember, the ask is the largest possible
value.

Hope that helps clarify!