Calculating Exchange Rate
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Using the attached table:
1) Calculate the bid and ask euro-dollar rate.
2) Calculate (showing all the exchange rates used at each step) how many dollars you would end up with if you started with $1,000 USD, and then converted:
1. $1,000 US dollars to Swiss francs
2. Swiss francs to euros
3. Euros to pounds, and then
4. Pounds to U.S. dollars.
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Solution Summary
The solution converts currencies using bid and ask rates.
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1) It looks likes you could do this calculation a couple of ways. You could use pounds, or francs. Using pounds, it would go like this:
The Euro dollar rate is the number of dollars that can be exchanged for one Euro.
Since for every pound is worth $1.50, and .7 pound is worth one Euro, we find:
L/$1.50 x E/.7 L = E/$1.05
Thus the ...
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