Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 0.64 euro. What is the cross rate of Swiss francs to euros?
A) 1.9828
B) 2.2031
C) 2.4234
D) 2.6658
E) 2.9324

Question

Quizplus · Accepted Answer

To find the cross rate between Swiss francs and euros, we need to convert the exchange rates for each currency into a common currency (either Swiss francs or euros), and then cancel out that common currency to find the cross rate.

First, let's convert the exchange rate between U.S. dollars and Swiss francs into Swiss francs per euro:

SF 1.41 = $1.00
1 euro = $1.00 / 0.64 = SF 1.5625

Now we can use the exchange rate between euros and U.S. dollars to find the cross rate:

1 euro = SF 1.5625 
1 Swiss franc = 1 / 1.41 euro 
1 Swiss franc = 0.7092 euro 
SF 1.00 = 0.7092 euro

Therefore, the cross rate of Swiss francs to euros is:

SF 1.00 = 0.7092 euro 
1 euro = SF 1.00 / 0.7092 = 1.4100 
1 Swiss franc = 1.4100 / SF 1.00 
1 Swiss franc = 1.4100 euros

So the cross rate of Swiss francs to euros is 1.4100, which is equivalent to 2.2031 (since 1 Swiss franc = 1.4100 euros). Therefore, the best choice is (B).

Suppose the Exchange Rate Between U