1. Avatar of karmuks says

    I am sorry if do not understand something. But in example after example 1 the second example where we sell GBP 1,493,250.00 and get for it only Euro 500,000.00? Please explain if I am missing something.

    • Avatar of John Moffat says

      I am not sure what the problem you are having is.

      The exchange rate given is £/Eur 2.9865

      This means that 2.9865 £’s are equal to 1 EUR. The way rates are quoted in the exam is that 2.9865 of the first quoted currency (here £’s) = 1 of the second quoted currency (here Euros).

      So 2 EUR = 2 x 2.9865 £’s and so on.

      So 500,000 EUR = 500,000 x 2.9865 £’s = GBP 1493250

      What might be confusing you is that often on the TV etc, they quote rates differently, but the rule in the exam is that above.

      Also, of course the rate I have given is not realistic (at the moment!) but in the exam obviously you use whatever rate you are given.

      • Avatar of karmuks says

        The way showed how to calculate exchange for me seems correct and understandable. What confuses me is that 1 euro is worth more than 1 pound. Or I should not pay attention to it?

      • Avatar of John Moffat says

        As I said in my previous reply, the exchange rate used is nothing like the current exchange rate. However in the exam you use whatever exchange rate is given to you.

        (At present 1 Euro is worth less than 1 pound, but that might not always be the case, and there are certainly other currencies that are worth more than 1 pound.)

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