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Chapter 5: Q2BP (page 681)

Suppose a polish zloty is selling for $0.3414 and a British pound is selling for 1.4973. what is the exchange rate (cross rate) of the Polish zloty to the British pound? That is, how many Polish zlotys are equal to a British pound?

Short Answer

Expert verified

4.3857 Polish zlotys are equal to 1 British pound

Step by step solution

01

Meaning of cross rate

Cross rate is used where one currency exchange rate is not available against all foreign currencies exchange rates

02

Explanation

The cross rate between the polish zloty and the British pound was 4.3857. to determine this value, we show that one dollar would buy 2.9291 polish zloty (1/0.3414) and a pound was equal to 1.4973 dollars. Thus, 2.9291 polish zloty per dollar times 1,4973 dollars per pound equaled 4.3857 polish zloty per pound.

03

Calculation of cross rate

1$=(10.3414)polishzloty

1$=2.9291polishzloty

And,1pound=$1.4973

Thus,$1.4973=(2.9291×1.4973)polishzloty

Therefore,1pound=$1.4973=4.3857polishzloty .

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