Question

You are looking at the Reuters screen and see the quotes given below. What is the...

You are looking at the Reuters screen and see the quotes given below. What is the EUR / USD parity based on the information given below?

EUR / TL 6,8986 / 25

USD / TL 6,1591/ 15

EUR / USD __?__/__?__

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Homework Answers

Answer #1

Calculation of EUR/USD:

EUR/USD = EUR/TL*TL/USD

GIVEN,

EUR/TL = 6,8986/6,8925

USD/TL = 6,1591/6,1515

Numerator will be called as bid rate and denominator will be called as ask rate

If it is indirect quote then 1/bid = ask rate and 1/ask = bid rate.

Calculation of bid rate:

EUR/USD = EUR/TL*TL/USD

= 6,8986*1/6,1515= 1,1214

(Note: Since TL/USD is not directly quoted then bid rate = 1/ask rate)

Calculation of ask rate:

EUR/USD = EUR/TL*TL/USD

= 6,8925*1/6,1591 =1,1191

(Note: Since TL/USD is not directly quoted then ask rate = 1/bid rate)

EUR/USD = 1,1214/1,1191

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