An exchange rate calculated using two other exchange rates is called a(n)________.

Question

Quizplus · Accepted Answer

A cross rate is a calculation of the exchange rate between two currencies that are not the official currencies in the country where the exchange rate quote is given. It is calculated based on the exchange rates of two other currencies. Therefore, option D is the correct answer. Option A is incorrect because interest arbitrage refers to taking advantage of differences in interest rates between two countries. Option B is incorrect because a forward contract is an agreement between two parties to buy or sell an asset at a future date at a predetermined price. Option C is incorrect because a forward rate is the exchange rate quoted for a financial transaction that will occur in the future.

An Exchange Rate Calculated Using Two Other Exchange Rates Is