Question

In: Finance

Use the information below to calculate the ask cross rate between C$ and € in the...

Use the information below to calculate the ask cross rate between C$ and € in the "C$/€ " format.

Bid Ask
Canadian Dollar $0.7505 $0.7786
Euro $1.1536 $1.1692

Answer Format: Keep four decimals; use the price currency as the unit. Example:  4.1234(C$) or 4.1234(€)

Solutions

Expert Solution

Solution:

As per the information given in the question we have

Bid rate of one Canadian Dollar = $ / C$ = $ 0.7505 ;  

Ask rate of one Canadian Dollar = $ / C$ = $ 0.7786 ;

Bid rate of one Euro = $ / € = $ 1.1536 ;  

Ask rate of one Euro = $ / € = $ 1.1692 ;

To find Ask cross rate for C$ / €

The Ask cross rate for C$ / € is calculated as follows :

C$ / € = Ask rate of ( C$ / $ ) * Ask rate of ( $ / € )

Calculation of ( C$ / $ ) Ask Rate :

The Ask Rate of C$ / $ = 1 / ( $ / C$) Bid Rate

= 1 / 0.7505

= 1.332445 C$ Per $                    

Thus the (C$ / $) Ask Rate = C$ 1.332445          …………………….. (A)

We know that Ask rate of ($ / €) = $ 1.1692   ……………………… (B)

Calculation of C$ / €   Ask cross Rate :

Ask Cross Rate ( C$ / € )= Ask rate of ( C$ / $ ) * Ask rate of ( $ / € ) = (A) * (B)

              = C$ 1.1332445 * $ 1.1692

              = C$ 1.557895

              = C$ 1.5579 ( When rounded off to four decimal places )

Thus the ask cross rate between C$ and € in the "C$/€ " format = 1.5579 C$


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