A major U.S. multinational firm has forecast the euro/dollar rate to be euro1.10/$ one year hence, and an exchange rate of $1.40 for the British pound (£) in the same time period. What does this imply the company's expected rate for the euro per pound to be in one year?
A) euro 1.40/£
B) £1.40/euro
C) £1.54/euro
D) euro 1.54/£

Question

Quizplus · Accepted Answer

To find the expected euro per pound rate, divide the expected euro/dollar rate by the expected dollar/pound rate: (euro1.10/$) / ($1.40/£) = euro1.54/£.

A Major US