Lect09-International Financial Markets-VineyChptr15

6455 x 1074 16638 step 4 eurjpy offer eurusd x usdjpy

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Unformatted text preview: 7.50/0.6450 = 166.67 EUR/JPY 166.38-67 15-24 • Calculating cross-rates (cont.) – Example 3: Crossing two direct FX quotations: Step by Step Approach: To get EUR/JPY Step 1: EUR/JPY = EUR/USD x USD/JPY = Transposing USD/EUR x USD/JPY Step 2: Transposing USD/EUR to EUR/USD = 1/0.6455 --- 1/0.6450 Step 3: EUR/JPY bid = EUR/USD x USD/JPY = 1/0.6455 x 107.4 = 166.38 Step 4: EUR/JPY offer = EUR/USD x USD/JPY = 1/0.6450 x 107.5 = 166.67 Thus EUR/JPY = 166.38 -- 67 15-25 • Calculating cross-rates (cont.) – Example 4: Crossing two indirect FX quotations: AUD/USD0.9262–69 GBP/USD1.9770–75 To determine the AUD/GBP cross-rate: 0.9262/1.9775 = 0.4684 0.9269/1.9770 = 0.4688 AUD/GBP0.4684–88 15-26 • Calculating cross-rates (cont.) – Example 4: Crossing two indirect FX quotations: Step by Step Approach: To get AUD/GBP Step 1: Step 1: AUD/GBP = AUD/USD x USD/GBP = AUD/USD x transposing of GBP/USD to USD/GBP Step 2: Transposing GBP/USD to USD/GBP = 1/1.9775 --- 1/1.9770 (Bid – Offer...
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