Question #1
Reading: Reading 5 Currency Exchange Rates - Understanding Equilibrium Value
PDF File: Reading 5 Currency Exchange Rates - Understanding Equilibrium Value.pdf
Page: 1
Status: Unattempted
Question
A bank in Canada is quoting CAD/USD 1.4950 − 1.5005, and USD/EUR 0.9350 − 0.9400. What is bid/ask exchange rate for CAD/EUR?
Answer Choices:
A. CAD/EUR 1.3978 − 1.4105
B. CAD/EUR 0.6254 − 0.6264
C. CAD/EUR 1.5904 − 1.6048
Explanation
The CAD/EUR bid quote is 1.495 × 0.935 = 1.3978
The CAD/EUR ask quote is 1.5005 × 0.940 = 1.4105