The following quotes for the Mexican peso and the Australian dollar Calculate th
ID: 2757173 • Letter: T
Question
The following quotes for the Mexican peso and the Australian dollar
Calculate the cross rates for the Austrilian Dollar (A$) in $, both bid and ask. Of the six trades available above, which three trades result in a profit?
Make sure to show how you calculate the two cross rates. Make sure that it is clear which currency you are buying or selling and whether it is at the bid or ask price.
Quoted Bid Price
Quoted Ask Price
Value of an Australian dollar (A$) in $
$0.67
$0.69
Value of Mexican peso in $
$.074
$.077
Value of an Australian dollar in Mexican pesos
MXP8.2
MXP8.5
The following quotes for the Mexican peso and the Australian dollar
Calculate the cross rates for the Austrilian Dollar (A$) in $, both bid and ask. Of the six trades available above, which three trades result in a profit?
Make sure to show how you calculate the two cross rates. Make sure that it is clear which currency you are buying or selling and whether it is at the bid or ask price.
Quoted Bid Price
Quoted Ask Price
Value of an Australian dollar (A$) in $
$0.67
$0.69
Value of Mexican peso in $
$.074
$.077
Value of an Australian dollar in Mexican pesos
MXP8.2
MXP8.5
Explanation / Answer
The Answer is
$/A$ (where the A$ is bought and sold) 0.6068/0.6545
Calculations:
For finding out the Bid Rate for A$ in terms of $
BID$/A$ = BID$/MXP * BIDMXP/A$ = 0.074**8.2 = 0.6068
For finding out the Ask Rate for A$ in terms of $
ASK$/A$ = ASK$/MXP * ASKMXP/A$ = 0.077*8.5 = 0.6545
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