Question
An Italian has just completed transactions in America and England. He is now holding $325,000 and 800,000, and wants to convert both amounts to euro.
An Italian has just completed transactions in America and England. He is now holding $325,000 and 800,000, and wants to convert both amounts to euro. His currency dealer provides this quotation: USD/GBP 1.2500 05 USD/EUR 1.1250 55
using the one of the following correct formulas: Where: C = common currency for which S(C/j) and S(C/k) are known:
S(jk)=(S(Ck))/(S(Cj))
Where: C = common currency for which S(j/C) and S(k/C) are known:
S(jk)=(S(jC))/(S(kC))
or
Where: Where Sa = spot ask rate and C = common currency for which Sa(C/j), Sb(C/j), Sa(C/k) and Sb(C/k) are known:
S^a (j/k)= (S^a (C/k))/(S^b (C/j))
Where: Where Sb = spot bid rate and C = common currency for which Sa(C/j), Sb(C/j), Sa(C/k) and Sb(C/k) are known:
S^b (jk)= (S^b (Ck))/(S^a (Cj))
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