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Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
ISBN: 9781305635937

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Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
ISBN: 9781305635937
Textbook Problem
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Recreate Table 17.2, which shows the currency cross rates, for the same currencies listed above.

Key Currency Cross Rates: Friday, May 29, 2015

TABLE 17.2

Chapter 17, Problem 2DQ, Recreate Table 17.2, which shows the currency cross rates, for the same currencies listed above. Key

Note: Column 1 shows how many units of each foreign currency a U.S. dollar would buy; column 2 shows how many units a euro would buy; and so on for the other columns.

Source: Adapted from “Key Currency Cross Rates,” The Wall Street Journal (online.wsj.com). June 1, 2015.

Summary Introduction

To prepare: Cross rate table.

Introduction:

Exchange Rate:

The exchange rate is the rate in which price of a country currency is measured in the term of other country’s currency. There are two methods of calculating the exchange rate direct and indirect.

  • Direct exchange method: One unit price of the foreign currency is defined in term of domestic currency.
  • Indirect method: One unit price of the domestic currency is defined in term of the foreign currency.

Cross rate:

Currency exchange rate of two countries which can be calculated with the help of third country’s currency is called cross rate.

Explanation

Cross rate table

Countries

US

dollar

EuroPound

Swiss

franc

PesoYen

Canadian

dollar

Canada1.24541.36901.90411.32460.08100.0100 
Japan124.1400136.4609189.8101132.03578.0728 99.6828
Mexico15...

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