Assume an FI sells A$100 million for US$ on the spot currency markets at an exchange rate of A$1.20 to $US1.00.What is the US$ value of the investment (round to two decimals)?
A)$100 million * $1.2 = US$120 000.00 million
B)$100 million / $1.2 = US$83 333.33 million
C)$100 million / ($1.2 - US$1.0) = US$500 000.00 million
D)$100 million * ($1.2 - US$1.0) = US$20 000.00 million

Question

Quizplus · Accepted Answer

To calculate the US$ value of the investment, we divide A$100 million by the exchange rate of A$1.20 to US$1.00. This gives us US$83,333,333.33, which we round to US$83,333.33 million. Therefore, the correct answer is B.

Assume an FI Sells A$100 Million for US$ on the Spot