Question

Isaac Diez Isaac Diez Peris lives in Rio de Janeiro. While attending school in Spain he meets Juan Carlos Cordero from Guatemala. Over the summer holiday Isaac decides to Visit Juan Carlos in Guatemala City for a couple of weeks. Isaac's parents give him some spending money, R$4,500. Isaac wants to exchange it to Guatemlan quetzal (GTQ). He collects the following rates: Spot rate on the R$/€ cross rate Spot rate on the €/GTQ cross rate R$ 10.5799/€ €0.4462/GTQ a. What is the Brazilian reais/Guatemalan quetzal cross rate? b. How many quetzals will Isaac get for his reais? Assumptions Amount of reais from parents Spot rate (R$/€) Spot rate (E/GTQ) Values 4,500.00 10.5799 0.4462 a. What is the RS/GTQ cross rate? Cross rate (R$/GTQ) b. How many quetzals will he get for his reais? Converting your reais into quetzals

Answer 1

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Answer (a):

Brazilian reais/Guatemalan quetzal cross rate= R$/GTQ

=> Simply the multiplication of cross rates of spot rates on (R$/€) * (€/GTQ) = R$/GTQ

=> R$/GTQ = 10.5799 * 0.4462 = 4.720

Answer (b):

Converting R$ 4500 into quetzals we get,

=> 4500*4.720 (From above exchange rate)

=> 21240