I. Traveling: From Tokyo to New York
After your post-graduation celebratory trip, you are leaving Tokyo for New York. You leave Tokyo with yen 100,000 in your wallet. Upon arriving at the JFK Airport, you observe the following quotes:
Bid Offer
Yen 110/$ Yen 120/$
If you want to exchange Yen 100,000 for dollars at the JFK airport, how much can you get?
II. Percentage change in spot rates
A year ago, the euro was trading at $1.10. Today, it is buying $1.25 per euro. What is the percentage change of the euro against the dollar?
Question 1:
If the current bid price for the Yen/USD currency pair is 110/$ and the current offer price is 120/$, this means that currently you can sell the Yen/USD at 110/$ and buy at 120/$
In this scenario, we have to buy dollars by exchanging Japanese Yen. So we can buy 100,000/120 = 833.33 USD by exchanging 100,000 Yens
Questions 2: Calculate exchange rates in Euro/Usd since question is about percentage change of euro against dollar
Initial Exchange Rate(Euro/USD) = 1/1.10 = 0.909 euro/usd
Final Exchange Rate(Euro/USD) = 1/1.25 = 0.8 euro/usd
Percentage Change = ((0.8 - 0.909) / (0.909)) * 100
= -11.9911%
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