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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Foreign Exchange
Hi,
I have practised many foreign exchange questions and listened to the lectures,
but i keep finding it difficult to determine whether to divide or multiply the exchange rates when depositing
a currency , converting to spot or borrowing a currency
Can you please help.
Sarma
There are two ways that the examiner can give you the exchange rates.
If he says something like: 1.5$’s to the Euro then it means that 1 EUR = 1.5 $’s
So if you are converting from Euros to $’s then you multiply by 1.5, but if you are converting from $’s to EUR then you divide by 1.5.
The other way is to give it this way: $/£ 2.30
This means that 2.3 of the first currency = 1 of the second. So 2.3 $’s = 1£
So converting from £’s to $’s you would multiply by 2.3. Converting from $’s to £’s you would divide by 2.3.
Hope that helps.