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Suppose that Cloudastries Bank is a U.S.-based financial intermediary that serves the foreign exchange market. Assume that this bank is willing to both purchase and
Suppose that Cloudastries Bank is a U.S.-based financial intermediary that serves the foreign exchange market. Assume that this bank is willing to both purchase and sell currency for the same rate. In other words, assume there is no bid/ask spread. Suppose Cloudastries has made the following direct quotations: Currency Mexican Peso Euro Dollar Spot Rate $0.60 $1.20 Additionally, Cloudastries has quoted a cross exchange rate of 1 euro = 2.01 pesos. pesos, rather than the 2.01 pesos per euro Based on the spot rates in the table, the cross exchange rate of the euro should be equal to that the bank is quoting
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