A currency trader observes the following quotes in the spot market: 1 U.S. dollar = 10.875 Mexican pesos
1 British pound = 6.205 Danish krone
1 British pound = 1.98 U.S. dollars
Given this information, how many Mexican pesos can be purchased for 1 Danish krone?
A) 2.7490
B) 2.8195
C) 2.8918
D) 2.9641
E) 3.0382

Question

Quizplus · Accepted Answer

First, we need to convert British pounds to Danish krone using the second quote:
1 British pound = 6.205 Danish krone

Then, we need to convert British pounds to U.S. dollars using the third quote:
1 British pound = 1.98 U.S. dollars

Combining these two conversions, we can find the conversion rate between Danish krone and U.S. dollars:
1 Danish krone = (1 British pound / 6.205 Danish krone) * (1.98 U.S. dollars / 1 British pound) = 0.317780826 U.S. dollars

Finally, we can convert U.S. dollars to Mexican pesos using the first quote:
1 U.S. dollar = 10.875 Mexican pesos

Therefore, we have:
1 Danish krone = 0.317780826 U.S. dollars
1 U.S. dollar = 10.875 Mexican pesos
1 Danish krone = 0.317780826 * 10.875 Mexican pesos = 3.4555854 Mexican pesos

Therefore, we can purchase 3.4555854 Mexican pesos for 1 Danish krone, which is approximately 2.8918 Mexican pesos (rounded to four decimal places). Therefore, the answer is C.

A Currency Trader Observes the Following Quotes in the Spot