Given the following pair wise exchange rates, estimate the cross-rate of pounds per euro.
$0)8410/£ $1.2223/euro

Question

Quizplus · Accepted Answer

To find the cross-rate of pounds per euro, we need to use the given pair wise exchange rates to convert each currency into a common currency (either dollars or euros) and then divide the pound amount by the euro amount. 
Let's convert pounds to dollars using the first exchange rate: 
1£ = $0.8410 
Now, let's convert euros to dollars using the second exchange rate: 
1€ = $1.2223 
We can solve for £/€: 
1£ = $0.8410 = (1£/$0.8410)($1.2223/€) = €1.4982/£ 
Therefore, the cross-rate of pounds per euro is £0.6639/euro (the reciprocal of €1.4982/£). 
The best choice is C.

Given the Following Pair Wise Exchange Rates, Estimate the Cross-Rate