Quotes are .008852-56 for the yen and .02874-6 for the Taiwanese dollar. He would like to purchase NT$ (Taiwanese dollar) 10 million. What is the yen cost of buying NT10$ million? A. YEN 3,077,886 B. YEN 3,081,420 C. YEN 32,452,575 D. YEN 32,489,833 Any cracks at it b4 we examine schwesser’s answer, (perhaps i’m tired & hallucinating)
the trick is to up the bid and lower the ask so with that in mind: we need the NT/YEN rate soooo : .008856$/y / .02874 $/NT multiply that by 10mil duz it work?
I get C.
I get D but may be I am wrong.
no wonder kabhii has been getting 80-90 scores!! A foreign currency dealer buys currency at a low (bid) price and resells it at a high (ask) price in order to make a profit. The easiest way to interpret a currency quote is to put the currency in which you want to transact in the denominator. The quotes are $0.008852-56/¥ and 0.02874-6/NT. So the dealer will buy yen for $0.008852 and resell it at 0.008856. The dealer will buy NT for $0.02874 and resell it at 0.02876. Carr will be selling yen at the dealer’s bid and buying NT at the dealer’s ask. To determine the yen cost of buying the NT$, we set up the currency quotes so U.S. and NT cancel and we are left with ¥. NT$ 10,000,000 × 0.02876/NT × ¥/$0.008852 = ¥32,489,833.
damn, im wrong 1luv
Going to sleep . . . Sad thing is I got this question right before.
step 1: YEN -> USD 1/0.008852 = 112.9688 step 2: step 1 ->TW 112.9688*0.02876 *10mil = YEN 32,489,833 I get D
NT$ 10,000,000 × 0.02876/NT × ¥/$0.008852 = ¥32,489,833. Anything wrong with schwesser’s answer? Confused this crap out of me.
how come the bid yen and ask NT was used? i used the bid NT and ask yen
Here is how you can try to solve such problems: In this question you want to convert Yen to NT, so keep Yen in denominator and NT in numerator. That is go from denominator to numerator. Now if you see the quotes given one is USD/YEN, so if I want to convert yen to USD then used bid quote. For conversion from denominator to numerator always use bid quotes and when its otherway used ask quotes. So for USD/NT, use ask quotes. After, you have done the calculation you will get .307789 NT for 1 yen, so just divide 10 mil by this number to get the yen needed.
say again? conversion from denominator to numerator?
Given any exchange rate quote: If you want to convert from denominator to numerator, use bid quote. For example for a given USD/GBP rate, if you want to convert GBP to USD use bid quote. If you want to convert from numerator to denominator use ask quote. For example for a given USD/GBP rate, if you want to convert USD to GBP use ask quote.
thanks so much! clear as mud now
i get D…