CMA Final · Strategic Financial Management · The International Financial Environment
The Indian rupee spot quote is USD/INR 82.00 and EUR/USD 1.10. What is the implied cross rate EUR/INR?
The cross rate is obtained by multiplying EUR/USD by USD/INR: 1.10 × 82.00 equals ₹90.20 per euro. Dividing would be wrong because both quotes are expressed as units of the second currency per one unit of the first.
- A₹90.20Correct
- B₹74.55
- C₹83.10
- D₹81.10
Explanation
EUR/INR = EUR/USD × USD/INR = 1.10 × 82 = ₹90.20. Dividing (82/1.10 = 74.55) is the inversion mistake.
Did you get it right without looking?
One question tells you little. A timed set on The International Financial Environment shows your real accuracy, how long you take and where you lose marks.
More The International Financial Environment questions
- Spot EUR/INR is 90.00 and spot USD/INR is 80.00. What is the EUR/USD cross rate implied?
- Under a floating exchange rate regime, which event would, other things equal, most directly cause the Indian rupee to appreciate against the…
- Under the Bretton Woods system that operated from 1944 until the early 1970s, which arrangement applied to member currencies?
- Indian one-year interest rate is 8% and the US one-year rate is 4%. Spot is Rs 80 per USD. As per interest rate parity, what is the approxim…
- Expected inflation is 6% in India and 2% in the USA. Spot is Rs 82 per USD. Under relative purchasing power parity, what is the expected spo…
- Spot USD/INR is 83.00. India's expected annual inflation is 6% and the US expected annual inflation is 2%. Using relative purchasing power p…