Question

You want to exchange 10,000 euros for Russian rubles as your travel from Paris, France to St. Petersburg, Russia.  The spot rate on the dollar/euro cross rate is $1.1878/€ and the spot rate on the ruble/dollar cross rate is Rbl 57.83/$.  How many rubles will you obtain for your euros?

Group of answer choices

205,000 Rbl.

145,580 Rbl.

486,866 Rbl.

686,905 Rbl.

Answer 1

Solution:
	Answer is 4th option 686,905 Rbl.
Working Notes:
	Today spot rate we have available
	spot rate on the dollar/euro cross rate is $1.1878/€
	Spot rate on the ruble/dollar cross rate is Rbl 57.83/$
Here	We use these two rates to get cross rate Ruble per Euro
	Spot rate on the dollar/euro cross rate is $1.1878/€
	€1 = $1.1878
	Using Unitary method we get $1 value in Euro
	From 1st Equation
	€1 = $1.1878
	$1.1878 = €1
	$1 = € (1/1.1878)	1st
Now use 2nd
	Spot rate on the ruble/dollar cross rate is Rbl 57.83/$
Means	$1 = Rbl 57.83	2nd
From 1st & 2nd	Equation we get, as both equation $1 , must be equal
	$1 = € (1/1.1878)
	$1 = Rbl 57.83
	From 1st & 2nd
	€ (1/1.1878) = Rbl 57.83
Now we €1 value	€1 = Rbl (57.83 x 1.1878)
	€1 = Rbl 68.690474
So	We get from 10,000 Euros from €1 = Rbl 68.690474
	€1 = Rbl 68.690474
	€10,000 = Rbl (68.690474 x 10,000)
	€10,000 = Rbl 686904.74
	€10,000 = Rbl 686,905
	686,905 Rubles will be received for 10,000 Euros
Please feel free to ask if anything about above solution in comment section of the question.