Purchase Solution

# 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.

##### Solution Summary

The solution converts currencies using bid and ask rates.

##### Solution Preview

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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