Consider the theoretical cross rate between Swiss francs and Japanese yen on March 10, 2009. The spot exchange rate for the two currencies in American terms was $0.8647 per Swiss franc and $0.0101 per Japanese yen. Which of the below is TRUE?

Question

Quizplus · Accepted Answer

To find the cross rate between Swiss francs and Japanese yen, divide the rate for Swiss francs by the rate for Japanese yen: $0.8647 / $0.0101 = 85.61386 yen per Swiss franc, which makes A correct. Taking the reciprocal of this gives the number of Swiss francs per yen, which is 1 / 85.61386 = 0.01168, making B and C correct as well. Therefore, all statements are true.

Consider the Theoretical Cross Rate Between Swiss Francs and Japanese