Question
You are given the following quoted FX rates: A Bank $ 1.7484/ B Bank 0.8398/ $ C Bank .4280/ After calculating the synthetic cross rate.
You are given the following quoted FX rates:
A Bank $ 1.7484/
B Bank 0.8398/ $
C Bank .4280/
After calculating the synthetic cross rate. Which bank and by how much is a currency overvalued/undervalued?
| a. | A Bank rate for US$ is undervalued by 2 US$ cents | |
| b. | B Bank rate for euros is undervalued by 5 euro cents | |
| c. | B Bank rate for US$ is overvalued by 3 US$ cents | |
| d. | C Bank rate for euros ( ) is overvalued by 4 euro cents |
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Advanced Accounting
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
14th Edition
1260247821, 978-1260247824
