cross rate formula This is a topic that many people are looking for. khurak.net is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, khurak.net would like to introduce to you Cross Rate Calculation. Following along are instructions in the video below:
“And gentlemen welcome to this screencast in which we are going to see how we we can calculate the cross rate. Very simply so let us write the title of presentation in cross rate. And quickly let us assume to foreign exchange. Quotations.
Number. One 140 ends to a dollar and number two deutsche. Marks. One point five to a dollar mark used to be the german currency before the advent of the euro.
So we have this quote boyish mark one point five two a dollar and we know that cross rate calculation is possible when we have two quotes in which we have one common currency so we have two currencies here yen s a quoted in terms of dollars and deutsche marks which are quoted also in terms of dollars. So we can calculate a crossfade between yen s and deutsche mark. So let s do that quickly cross rate will be equal to now let me give you a little tip when you come across two foreign exchange quotes in which the order of the currencies is the same for example look at these two quotes carefully dollar in the first quote is the denominator currency and dollar in the second quote also is the denominator currency..
Then your cross rate calculation is pretty simple. What you do is you write the number from the first quote. Which is 140. We answer and you divide this 140 by the number in the second quote.
This is one point five here one point. Five so this division is going to give you 90. 33333. Now what currency is this ninety three point three three three three.
The answer is simple remember in a cross strait calculation. The common currency is supposed to cancel out so. The common currency in these..
Two quotations is the dollar. A dollar here and the dollar here they are going to cancel out and they are going to leave you with yen s and deutsche marks. So what is this now ninety three point three three is it the n or is it the deutsche mark look your calculation in the numerator. You wrote 140 ends in the denominator.
You wrote deutschmarks. So the same order of the currencies. You are going to write here. So you have in yen s in the numerator and per deutschmark so that is your cross rate calculation pretty simple it was isn t it now you can also come across a situation where the two ports.
Given to you are not in the same order of the currencies for example. The first quote we have we have written as it is 140 yen s to a dollar but let s assume if the second quote is given in the format. Where dollar is in the numerator..
What are we going to do then let us write this quote. But in a reverse fashion this at the moment. It is currently in the format of deutschmarks to a dollar. If we want to write it in the other order dollars to a.
Deutschmark we are going to simply take the reciprocal of 115. And that is going to give us zero point six six six six dollars to a deutsche mark. So now you have two courts here with you where the order of the currencies is different in the first code. The dollar is in the denominator and in the second code.
The dollar is in the numerator. The common currency is still the same dollar. But in one court it occurs in the denominator in the second coat it occurs in the numerator..
Then the calculation of the cross rate is still pretty simple cross rate is equal to you pick up the number from the first quarter 140. And then you put a multiplication sign rather than dividing this time you multiply by the second number which you pick up from here. So let s write it to zero point six six six six and since in the cross rate. The common currency is going to cancel out so these dollars are going to cancel out so that is going to leave you with again super deutschmark.
So you have egan s is going to give you the same answer nine to 33333. ” ..
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