{"id":3750,"date":"2018-04-22T02:53:00","date_gmt":"2018-04-22T02:53:00","guid":{"rendered":"http:\/\/34.239.104.200\/?p=3750"},"modified":"2023-05-26T09:23:12","modified_gmt":"2023-05-26T09:23:12","slug":"currency-cross-rates","status":"publish","type":"post","link":"https:\/\/analystprep.com\/blog\/currency-cross-rates\/","title":{"rendered":"CFA Study Guide \u2013 Calculating Currency Cross Rates"},"content":{"rendered":"<p>In this short post, we&#8217;ll be looking at calculating currency cross rates. If you understand how to do these calculations, this will give you easy points in your CFA exam.<\/p>\n<p><!--more--><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/analystprep.com\/blog\/currency-cross-rates\/#This_is_the_3_steps_process_to_calculate_currency_cross_rates\" >This is the\u00a03 steps process to calculate currency cross rates:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/analystprep.com\/blog\/currency-cross-rates\/#Example\" >Example<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/analystprep.com\/blog\/currency-cross-rates\/#What_is_the_USDEUR_spot_rate\" >What is the USD\/EUR spot rate?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"This_is_the_3_steps_process_to_calculate_currency_cross_rates\"><\/span>This is the\u00a03 steps process to calculate currency cross rates:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ol>\n<li>Set up the equation.<\/li>\n<li>Divide by 1\u00a0to switch the numerator and denominator of a spot rate you do not have.<\/li>\n<li>Multiply the spot rates.<\/li>\n<\/ol>\n<h3><span class=\"ez-toc-section\" id=\"Example\"><\/span>Example<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Let&#8217;s say you are given:<\/p>\n<ul>\n<li>EUR\/GBP =\u00a00.78<\/li>\n<li>CAD\/GBP =\u00a00.54<\/li>\n<li>USD\/CAD =\u00a01.28<\/li>\n<\/ul>\n<h4><span class=\"ez-toc-section\" id=\"What_is_the_USDEUR_spot_rate\"><\/span><strong>What is the USD\/EUR spot rate?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>First, we need to set up the equation:<\/p>\n<blockquote><p>USD\/CAD x CAD\/GBP x\u00a0GBP\/EUR<\/p>\n<p>= USD\/<del>CAD<\/del>\u00a0x\u00a0<del>CAD<\/del>\/<del>GBP<\/del>\u00a0x\u00a0<del>GBP<\/del>\/EUR = USD\/EUR<\/p><\/blockquote>\n<p>But we don&#8217;t have GBP\/EUR, so we will have to divide the spot rate by 1.<\/p>\n<blockquote>\n<p style=\"text-align: left;\">GBP\/EUR = 1\/EUR\/GPB = 1\/0.78 =\u00a01.28<\/p>\n<\/blockquote>\n<p>Then, when we have every spot rate, we simply multiply everything:<\/p>\n<blockquote><p>USD\/CAD x CAD\/GBP x\u00a0GBP\/EUR<\/p>\n<ul>\n<li>USD\/CAD = 1.28<\/li>\n<li>CAD\/GBP =\u00a00.54<\/li>\n<li>GBP\/EUR =\u00a01.28<\/li>\n<\/ul>\n<p>USD\/EUR = 1.28 x 0.54 x 1.28 =\u00a00.88<\/p><\/blockquote>\n<p>If you would like to practice questions\u00a0on\u00a0this topic, consider our\u00a0<a href=\"https:\/\/analystprep.com\/\">CFA Level 1 Question Bank<\/a>.<\/p>\n<p>Simon<\/p>\n<p>simon.royal@analystprep.com<\/p>\n<blockquote class=\"wp-embedded-content\" data-secret=\"OtfEnoav3l\"><p><a href=\"https:\/\/analystprep.com\/shop\/all-3-levels-of-the-cfa-exam-complete-course-by-analystprep\/\">All 3 Levels of the CFA Exam &#8211; Complete Course offered by AnalystPrep<\/a><\/p><\/blockquote>\n<p><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;All 3 Levels of the CFA Exam &#8211; Complete Course offered by AnalystPrep&#8221; &#8212; AnalystPrep\" src=\"https:\/\/analystprep.com\/shop\/all-3-levels-of-the-cfa-exam-complete-course-by-analystprep\/embed\/#?secret=xYcEcS6DXc#?secret=OtfEnoav3l\" data-secret=\"OtfEnoav3l\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/p>\n<p>Photo by\u00a0<a href=\"https:\/\/unsplash.com\/photos\/GcnPjvqRL18?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText\">Maria Imelda<\/a>\u00a0on\u00a0<a href=\"https:\/\/unsplash.com\/search\/photos\/currency?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText\">Unsplash<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this short post, we&#8217;ll be looking at calculating currency cross rates. If you understand how to do these calculations, this will give you easy points in your CFA exam.<\/p>\n","protected":false},"author":1,"featured_media":7896,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[70],"tags":[],"class_list":["post-3750","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cfa","blog-post","animate"],"acf":[],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/posts\/3750","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/comments?post=3750"}],"version-history":[{"count":4,"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/posts\/3750\/revisions"}],"predecessor-version":[{"id":11004,"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/posts\/3750\/revisions\/11004"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/media\/7896"}],"wp:attachment":[{"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/media?parent=3750"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/categories?post=3750"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/analystprep.com\/blog\/wp-json\/wp\/v2\/tags?post=3750"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}