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? (In other words,how many Swiss francs are needed to purchase one euro?)
A)1.9828
B)2.2031
C)2.4234
D)2.6658
E)2.9324

Question

Quizplus · Accepted Answer

To find the cross rate, we need to convert both currencies to a common currency (either USD or EUR) and then compare the exchange rates.

First, we convert SF 1.41 to USD:

SF 1.41 / $1 = $0.7092

Next, we compare the exchange rates of USD/EUR:

$1.00 = 0.64 euro

Finally, we can use these two exchange rates to find the cross rate of SF/EUR:

SF 1 / 0.7092 USD x $1.00 / 0.64 EUR = 1.4056 / 0.64 EUR

Simplifying this, we get:

2.2031 SF = 1 EUR

Therefore, it takes 2.2031 Swiss francs to purchase one euro. The best choice is B.

Suppose the Exchange Rate Between U