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BPP Kit 2016/2017 Question 241
I don’t understand why they converted at $2. It’s a payment and as you explain, we use whichever rate is worse for us which will be the lower rate.
Also, why did they multiply rather than dividing in converting?
The question gives how many $’s are equal to 1 Euro.
This is a US company needing to pay in Euros.So for every 1 Euro they need to pay $2’s – we multiply because each Euro costs $2, and we convert at $2 because multiplying by 2 means they pay more than if we multiplied by 1.96 (which therefore the rate that is worst for them).
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