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Basic Question 15 of 19
CAD is selling for $0.71 (USD/CAD = 0.71) and the buying rate for GBP is $1.42 (USD/GBP = 1.42). The CAD/GBP cross rate is ______.
User Contributed Comments 4
| User | Comment |
|---|---|
| ankurwa10 | CA$ and US$ as well as GBP and US$ are mentioned in direct quotes here. Therefore, the GBP CAD rate of 2 is also cross rate. Is it the correct understanding ? |
| choas69 | A/B = (A/USD) / (B/USD) A/B = (A/USD) x (USD/B) this would be very helpful and short. |
| mtsimone | @choas69: Perfect. That simple formula keeps me sane where the currency you want to dump cancels. |
| davidt876 | chaos & mtsimone - just remember in these types of questions they have already selected the correct selling and buying rates for you to use.. if they give you both bid and ask prices, for any of the pairs, you'll need to take a second to think thru which prices you should be using |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
calculate and interpret the bid-ask spread on a spot or forward foreign currency quotation and describe the factors that affect the bid-offer spread;
identify a triangular arbitrage opportunity and calculate its profit, given the bid-offer quotations for three currencies;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.