CFA Practice Question

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CFA Practice Question

CA$ is selling for $0.71 (CA$:US$ = 0.71) and the buying rate for GBP is $1.42 (GBP:US$ = 1.42). The GBP:CAD cross rate is ______.
Correct Answer: 2

1.42/0.71 = 2

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
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