Question

In: Accounting

Bid and Ask quotes for the USD priced in EUR and for the Norwegian Krone (NOK) priced in USD are given as follows:

Bid and Ask quotes for the USD priced in EUR and for the Norwegian Krone (NOK) priced in USD are given as follows:

EUR 0.8478 0.8525/USD

USD 0.1250-0.1310/NOK

Calculate the bid and ask cross rates for the NOK priced in EUR terms: S (EUR/bid NOK) and S (EUR/ask NOK).

Solutions

Expert Solution

EUR/bid NOK = Term currency Bid * Base currency ask

EURNOK Bid = EURUSD Bid * USDNOK Ask

EURNOK Bid = 0.8478 * 0.1310

 

EURNOK Bid or EUR/bid NOK = 0.111062 or 0.1111 - Price at which market buy EUR and sell NOK.

 

EUR/ask NOK = Term currency Ask * Base currency Bid

EURNOK Ask = EURUSD Bid * USDNOK Ask

EURNOK Ask = 0.8525 * 0.1250

 

EURNOK Ask or EUR/ask NOK =  0.106563 or 0.1066 - Price at which market sell EUR and buy NOK.


EURNOK Ask or EUR/ask NOK =  0.106563 or 0.1066 - Price at which market sell EUR and buy NOK.

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