Question

Suppose the quote for AUD is USD1.1911-63/AUD. If you want to buy USD31, how much AUD will you need?

Select one:

a. 26.03

b. 25.91

c. 30.81

d. 36.92

e. 31.20

Answer 1

A option is the correct answer.

Explanation

Quote rate is for 1 AUD is 1.1911 -1.1963 USD

It means that for 1 AUD the bank will buy at 1.911 and sell at 1.1963 USD and the difference is their profit.

Since quuote is in AUD we will have to first convert in USD.

1 AUD = 1.1911 -1.1963 USD

1 USD = 1/1.1963 - 1/1.1911 AUD ( When we do reciprocal,the rate in denominator side changes)

Since bank is selling 1/1.1911 rate will be used for converting.

1 USD = 1/1.1911 AUD

31 USD = (1/1.1911) * 31 AUD

31 USD = 26.0263 AUD

31 USD = 26.03 AUD

So 26.03 is the correct answer