Cross Rates and Currency Conversion

This video tutorial explains how to calculate the cross rate between two foreign currencies, specifically the Mexican Peso and the Indian Rupee, using given exchange rates with the US Dollar. The instructor demonstrates two methods: dividing by 19 and dividing by 70, to find the implied exchange rate between the Peso and the Rupee. The video concludes with a summary of both methods, highlighting the different perspectives of the cross rate calculation.

What is the purpose of calculating a cross rate between two foreign currencies?

• To calculate the interest rate between two countries

• To assess the economic stability of a country

• To find the exchange rate between two foreign currencies without using a domestic currency

• To determine the value of a domestic currency

If $1 equals 19 Mexican Pesos, what is the exchange rate of Pesos to Dollars?

• 1 Peso = $0.70

• 1 Peso = $0.19

• 1 Peso = $0.0526

• 1 Peso = $1.19

What is the exchange rate of Indian Rupees to Dollars if $1 equals 70 Indian Rupees?

• 1 Rupee = $0.07

• 1 Rupee = $0.0143

• 1 Rupee = $0.70

• 1 Rupee = $0.19

What is a cross rate?

• A fixed exchange rate set by the government

• An exchange rate between a domestic currency and a foreign currency

• An exchange rate that fluctuates daily

• An exchange rate between two foreign currencies using a third currency as a reference

How do you calculate the cross rate of 1 Peso in Rupees using the given exchange rates?

• Add 19 and 70

• Divide 70 by 19

• Multiply 19 by 70

• Divide 19 by 70

What is the result of dividing 70 Rupees by 19 Pesos?

• 3.68 Rupees per Peso

• 0.27 Rupees per Peso

• 1.19 Rupees per Peso

• 70 Rupees per Peso

How do you calculate the cross rate of 1 Rupee in Pesos using the given exchange rates?

• Multiply 19 by 70

• Add 19 and 70

• Divide 19 by 70

• Divide 70 by 19

What is the result of dividing 19 Pesos by 70 Rupees?

• 1.19 Pesos per Rupee

• 3.68 Pesos per Rupee

• 0.27 Pesos per Rupee

• 70 Pesos per Rupee

Which of the following is a correct expression of the cross rate between Peso and Rupee?

• 1 Peso = 19 Rupees

• 1 Peso = 3.68 Rupees

• 1 Peso = 70 Rupees

• 1 Peso = 0.27 Rupees

Which of the following is another correct expression of the cross rate between Peso and Rupee?

• 1 Rupee = 70 Pesos

• 1 Rupee = 3.68 Pesos

• 1 Rupee = 0.27 Pesos

• 1 Rupee = 19 Pesos