CMA Final · Strategic Financial Management · The International Financial Environment
Spot EUR/INR is 90.00 and spot USD/INR is 80.00. What is the EUR/USD cross rate implied?
The implied EUR/USD cross rate is 1.1250. Dividing the rupee price of one euro, 90, by the rupee price of one dollar, 80, gives the dollars needed per euro. The inverse, 0.8889, would be euros per dollar.
- A0.8889
- B1.1250Correct
- C1.2500
- D0.9000
Explanation
EUR/USD = (EUR/INR)/(USD/INR) = 90/80 = 1.1250. The value 0.8889 is the inverse (USD per... mistaken direction).
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