Question

Suppose you would like to convert $1,000 and ¥ 220,000 to Euros. According to the quotes below, what are your total proceeds from conversion?

Bank Quotations
	Bid	Ask
Japanese Yen ($/¥)	117.6471	128.2051
Euros (€/$)	1.4732	1.4742

a) Find the direct quotations of Japanese Yen.

b) What are the total proceeds from conversion?

Answer 1

a) Direct quoations of Japanese Yen:

Japanese Yen (€/¥) bid price =  $/¥ bid x €/$ bid

Japanese Yen (€/¥) bid price = 117.6471 x 1.4732

Japanese Yen (€/¥) bid price = 173.3177

Japanese Yen (€/¥) ask price =  $/¥ ask x €/$ ask

Japanese Yen (€/¥) ask price = 128.2051 x 1.4742

Japanese Yen (€/¥) ask price = 189.0000

Therefore Japanese Yen (€/¥) quotes = 173.3177 189.0000

b) USD converted to Euro = $1,000

Therefore USD proceeds in euro = $1000 / €/$ ask

Therefore USD proceeds in euro = $1000 / 1.4742

Therefore USD proceeds in euro = € 678.33

Yen converted to Euro = ¥ 220,000

Therefore Yen proceeds in euro = ¥220,000 / €/¥ ask

Therefore Yen proceeds in euro = ¥220,000 / 189

Therefore Yen proceeds in euro = €1164.02

Therefore total proceeds = € 678.33 + €1164.02

Therefore total proceeds = €1,842.25