CFA Level I · CFA Level I Exam · Exchange Rate Calculations
A dealer quotes USD/EUR at 0.9200/0.9206 and USD/JPY at 150.00/150.10. A client wants to buy euros and pay with yen at the dealer's cross rate, which is JPY per EUR. The dealer's ask for EUR/JPY is closest to:
The EUR/JPY ask is about 163.17 (calculated 163.15). The client buys EUR and pays JPY, so the dealer uses the highest USD/JPY ask of 150.10 and divides by the lowest USD/EUR bid of 0.9200, which maximizes the price of euros in yen.
- A162.92
- B163.01
- C163.17Correct
Explanation
Ask EUR/JPY = ask USD/JPY / bid USD/EUR = 150.10/0.9200 = 163.15. Working: 150.10/0.92 = 163.152, which rounds to 163.15, closest to 163.17. Using 150.00/0.9206 = 162.94 mixes the wrong sides; 150.10/0.9206 = 163.04 uses the wrong EUR side.
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