- CFA Exams
- CFA Level I Exam
- Study Session 5. Economics (2)
- Reading 18. Currency Exchange Rates
- Subject 3. Cross-Rate Calculations

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**CFA Practice Question**

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

In New York: $1 = ¥120

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

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**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. |