Confusion in forex

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Budding Professional

B.Com CA & CS FINAL

948 Points Posted on 17 August 2012

Hello members..

I am studying Foreign Exchange Management and have landed in doubt in very basic question. Actually there are two questions which are creating doubt and they are as follows:

Que 1. If the Canadian dolllar is equal to $ 0.86 and the German Mark is equal to $ 0.28, what is the value of the German Mark in terms of Canadian dollars?

Answer given is 0.3256

Que 2. If the German Mark is equal to $ 0.35 and the French Franc is worth 0.31 German Mark, what is the franc/dollar exchange rate?

Answer given is 9.228 French Francs per dollar

I had absolutely no problems in reaching the answer to Question no. 1 but to the second question, I am getting confused as to how the answer has been calculated. Would it be right to assume that the quotes are indirect in Que 2 or the answer to the second question have been wrongly given.

Please guide me, though it is very elementary and fundamental to ask at this level.

Replies (3)

M. N. JHA

6678 Points Posted on 18 August 2012

Ans. of 2- 1GM=$0.35 i.e. 1$=2.857143 1FF=0.31GM i.e 1GM=3.22581 FF/$=GM/$ * FF/GM, then FF/$=2.857143*3.22581=9.2166

Budding Professional

B.Com CA & CS FINAL

948 Points Posted on 18 August 2012

Originally posted by : Mr. JHA
	Ans. of 2- 1GM=$0.35 i.e. 1$=2.857143 1FF=0.31GM i.e 1GM=3.22581 FF/$=GM/$ * FF/GM, then FF/$=2.857143*3.22581=9.2166