Question

Cross Exchange Rate Assume Poland’s currency (the zloty) is worth $.17 and the Japanese yen is worth $.008. What is the cross rate of the zloty with respect to yen? That is, how many yen equal a zloty?

Answer 1

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Correct Answer: 1 zloty = 21.25 yen

Working :

Here the concept of Cross rate will be applied. A cross rate is the currency exchange rate between two currencies when neither are the official currencies of the country in which the exchange rate quote is given.

Cross rate = (Zloty/ Dollar) X (Dollar/ Yen)

=> Cross rate = $ 0.17 X $ (1/0.008) = 0.17/0.008

=> Cross rate = 21.25

Therefore, 1 Zloty = 21.25 yen