Question

Suppose that one year ago the spot rate for the British pound was $1.40 per pound, while the spot rate for the peso was $1.00 per peso.

The cross rate of the British pound one year ago was £1 = _______ pesos.

Suppose that now the spot rate for the British pound is $2.00 per pound, while the spot rate for the peso was $1 per peso.

Now, the cross rate of the British pound is £1 = _________ pesos. This represents a _____ percent change in the cross rate of the British pound.

Answer 1

1.
1.40$=1 pound
1$=1 peso

=>1.40$=1.40 peso
=>1.40 peso=1 pound

Cross rate one year ago was 1 pound=1.40 pesos

2.
2$=1 pound
1$=1 peso

=>2$=2 peso
=>2 peso=1 pound

Cross rate is 1 pound=2 pesos

3.
=2/1.40-1
=42.85714%