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CFA Level I · CFA Level I Exam · Exchange Rate Calculations

The GBP/CHF rate (CHF per 1 GBP) moves from 1.1500 to 1.1155. Which statement about the change in the Swiss franc relative to the pound is most accurate?

The franc appreciated by about 3.1%. The pound fell 3.0% as the GBP/CHF quote dropped from 1.1500 to 1.1155, and since the franc is the price currency, its gain is the inverse ratio 1.1500/1.1155 - 1, or about 3.1%.

  1. AThe franc appreciated by about 3.1%Correct
  2. BThe franc depreciated by about 3.0%
  3. CThe franc appreciated by about 3.0%

Explanation

The pound fell: 1.1155/1.1500 - 1 = -3.0%. The franc is the price currency, so its change is 1.1500/1.1155 - 1 = +3.09%, about 3.1% appreciation. The other options either have the wrong direction or use the base currency's change.

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