1. Change the following direct quote exchange rate into indirect quote: 1£=1.437

Question

1. Change the following direct quote exchange rate into indirect quote:

            1£=1.4374$                             1¥=0.0109$

2. Change the following indirect quote exchange rate into direct quote:

            1$=0.7789 Euro                      1$=14.4183 Peso

3. When you travel to Japan, you observe the following exchange rates of Japanese Yen (¥) at Bank of Tokyo:

Bid: 0.009465$                                   Ask: 0.009470$

If you want to exchange your $500 to Japanese Yen, how much Yen you can get?

Before you come back to U.S., if you still have ¥4,500 and you want to exchange them back to U.S. $, how much $ you can get if the exchange rates stay the same

Explanation / Answer

1. Indirect Quote:
=> 1/1.4374 => 1$ = 0.6957£
=> 1/0.0109 => 1$ = 91.7431¥

2. Direct Quote:
=> 1/0.7789 => 1 Euro = 1.2828$
=> 1/14.4183 => 1 Peso = 0.06935$

3. Total Yen Received = $500 / 0.009470 = 52,798.31 Yen (Ask price means that the bank will sell the Yen for this price)

Total $ Received = ¥4,500 x 0.009465 = $42.5925 (Bid price means that the bank will buy the Yen for this price)

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