Question

The exchange rate between the sterling pound ($) and the euro during a particular day was $1 to 1.19 euros. a) how many euros would be equivalent to $320? b) how many pounds would be equivalent to 956 euros

Answer 1

Answer:

$1=1.19 Euro

$320=320*1.19

=380.8 Euro

Answer 2

Answer:

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Exchanging foreign currency is an essential practical task, which all treasurers need to tackle with confidence. Let's explore a winning technique to ensure you get it right every time.

BACK TO BASICS

Exchanging one currency for another needs us to apply a quoted market price, known as the exchange rate. Sometimes we need to multiply by the rate. Sometimes we need to divide by it.

It all depends on how the rate has been quoted. And this won’t always be the same.

MONEY FOR STUFF

Pricing is easier when we’re buying or selling physical stuff for money. We simply multiply the quantity by the money price per unit.

Let’s say the oil price is $50 per barrel, and we want to sell a million barrels. The money value for the exchange is simply:

50 per barrel x 1 million barrels = 50perbarrelx1millionbarrels=50m

WHY WE MULTIPLIED

We multiply by commodity prices because of the way they’re quoted. The commodity quote is a variable amount of money per fixed conventional unit of the commodity.

Oil prices are quoted in dollars per barrel. So, multiplying a number of barrels by dollars per barrel gives the dollar value for the exchange. The oil is the basis, or the ‘base’ of the conventional oil-price quote.