CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

An analyst is reviewing the following quotes from around the world:

In London: £1 = $2
In New York: $1 = ¥120

What is the true cross rate between the £ and ¥ (£:¥)?
A. 60
B. 240
C. 0.0042
Explanation: Cross rate £:¥ = 120 * 2 = 240

User Contributed Comments 5

User Comment
endurance like - nam-nam
MarcCFA (P:Y) Pound per Yen... you get 0.0042 pound per yen.
You get 240 Yen per pound.
Make it clear what way you want the answer !
If you want pounds in terms of 1 yen, that's 0.0042!
will080912 This exercise is really easy, but the ":" thing confuses me. I got 0.0042 because I thought you want it to know pount/Yen.
kofientum I thought the base currency should be the second currency (i.e Yen) therefore one Yen, with Yen as the denominator, will buy 0.0042 pounds.
kofientum Got the answer. The base currency is always mentioned first when both currencies are mentioned, therefore pounds should be the base currency instead.
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