I do actually explain in the lecture that interest rates are always quoted as annual rates even though they only apply to loans and deposits for the period stated (in this case 3 months). If the loan or deposit was for 6 months then the interest rate quoted would still be quoted as an annual rate, but would be a different annual rate.

Hi Sir, When you convert the $ deposit of 7,874,016 to find out how many pounds you need to borrow, shouldn’t you divide by 1.6283 because you will have to sell $’s to buy pounds?

raonanuga says

The question says 3 months interest rate why have you converted it yet again to a monthly rate

John Moffat says

I do actually explain in the lecture that interest rates are always quoted as annual rates even though they only apply to loans and deposits for the period stated (in this case 3 months).

If the loan or deposit was for 6 months then the interest rate quoted would still be quoted as an annual rate, but would be a different annual rate.

sharon1507 says

Hello, i am really confused about when to divide and when to multiply. Can someone help me please. Thank you

John Moffat says

Have you watched the first in this series of lectures?

zaidrafiqkhan says

Basically this is the core problem most students faced,

Just remember one simple thing you have to pay high and receive low amount… so do your calculations in that way.

noormkhan says

Use the following table

First currency. Second currency

Payments _We buy Low rate High rate

We sell. High. Low

Conversion Division Multiplication

John Moffat says

If you want to deposit $’s then you need to buy $’s in order to have $’s to put on deposit.

devilspal says

Thank you. Helps!

John Moffat says

You are welcome 馃檪

thirushi says

Hi Sir,

When you convert the $ deposit of 7,874,016 to find out how many pounds you need to borrow, shouldn’t you divide by 1.6283 because you will have to sell $’s to buy pounds?

rehan1o1 says

same question sir, kindly reply

John Moffat says

I did reply the same day – the reply is above the question 馃檪