A currency trader observes the following quotes in the spot market:
Given this information,how many Mexican pesos can be purchased for 1 Danish krone?
A)2.7490
B)2.8195
C)2.8918
D)2.9641
E)3.0382

Question

A currency trader observes the following quotes in the spot market:
 Given this information,how many Mexican pesos can be purchased for 1 Danish krone?
A)2.7490 
B)2.8195 
C)2.8918 
D)2.9641 
E)3.0382

Quizplus · Accepted Answer

To determine how many Mexican pesos can be purchased for 1 Danish krone, we need to use the quote for MXN/DKK, which is 0.28918/1. Multiplying this by 1 DKK gives us 0.28918 MXN. To invert this rate and get the quote for DKK/MXN, we take the reciprocal, which is 1/0.28918 = 3.4544. Therefore, we can purchase 3.4544 MXN for 1 DKK. Rounding to four decimal places, the answer is 2.8918, which corresponds to choice C.

A Currency Trader Observes the Following Quotes in the Spot