Calculating the Canadian Dollar/Swiss Franc Exchange Rate Calculate the Canadian dollar/Swiss franc and Swiss Franc/Canadian dollar exchange rates using the cross rates of 1.4013 Canadian dollars/euro and 0.9549 euro/ Swiss Franc.

Question

Calculating the Canadian Dollar/Swiss Franc Exchange Rate

Calculate the Canadian dollar/Swiss franc and Swiss Franc/Canadian dollar exchange rates using the cross rates of 1.4013 Canadian dollars/euro and 0.9549 euro/ Swiss Franc.

Accepted Answer

STEP 1: Formulate a Solution Strategy

Columns 2 and 4 of Table 16-3 provide the Canadian dollar/euro and euro/Swiss Franc rates, which can be used to determine the Canadian dollar/Swiss franc and Swiss franc/Canadian dollar exchange rates as follows:

[latex] \frac {Canadian \$}{€} imes \frac{€}{ Swiss franc} \frac { Candian \$}{ Swiss franc} [/latex]

Since the Swiss franc/Canadian dollar exchange rate is the reciprocal of the Canadian dollar/Swiss franc exchange rate shown above, it can then be calculated as the reciprocal of the direct quote.

TABLE 16-3 Key Currency Cross Rates, Thursday, May 8, 2018
	Dollar	Euro	Pound	Sfranc	Peso	Yen	CdnDlr
Canada	1.2952	1.5365	1.7544	1.2927	0.0662	0.0119	…
Japan	109.124	129.4593	147.8194	108.9171	5.5753	…	84.2559
Mexico	19.5729	23.2203	26.5135	19.5358	…	0.1794	15.1125
Switzerland	1.0019	1.1886	1.3572	…	0.0512	0.0092	0.7736
UK	0.7382	0.8758	…	0.7368	0.0377	0.0068	0.5700
Europe	0.8429	…	1.1418	0.8413	0.0431	0.0077	0.6508
United States	…	1.1864	1.3546	0.9981	0.0511	0.0092	0.7721

STEP 2: Crunch the Numbers

Substituting into the equation, we compute the euro/pound exchange rate:

[latex] \frac {Canadian \$}{€} imes \frac{€}{ Swiss franc} [/latex] = 1.4013 × 0.9549 = [latex] \frac { 1.3381 Canadian \$}{ Swiss franc} [/latex]

Thus, the Swiss Franc/Canadian dollar exchange rate is:

[latex] \frac{1}{ 1.3381} = \frac{0.7473 Swiss francs}{Canadian \$} [/latex]

STEP 3: Analyze Your Results

The Canadian dollar/Swiss franc exchange rate is 1.3381 Canadian dollars per Swiss franc, and the Swiss franc/Canadian dollar exchange rate is 0.7473 Swiss francs per Canadian dollar

Question 16.2: Calculating the Canadian Dollar/Swiss Franc Exchange Rate Ca...

Related Answered Questions

Computing the Percent-Per-Annum Discount Calculate the annualized percentage discount on the 90-day or 3-month British pound given a 3-month forward rate of 1.5344 and a spot rate of 1.5350. ...

Verified Answer:

Computing an Exchange Amount Using a Direct Quote An American business must pay 1,000 euros to a German firm and the current exchange rate is $1.1293 dollars per euro, how many dollars will be required for thistransaction? ...

Verified Answer: