Question

An executive from Switzerland checked into a hotel room in Spain and was told by the manager that 1 EUR will be 1.2983 CHF. From the executive's perspective, an INDIRECT exchange rate would be:

a) 0.7705
b) 0.7710
c) 0.7715
d) 0.7720

Answer 1

The indirect exchange rate for the Swiss executive in Spain, when 1 EUR equals 1.2983 CHF, is approximately 0.7705 CHF/EUR.

Step-by-step explanation:

From the perspective of the executive from Switzerland, an indirect exchange rate is expressed in terms of the foreign currency per unit of the domestic currency. In this case, the manager told the executive that 1 EUR equals 1.2983 CHF. To find the indirect exchange rate, one would divide 1 by the direct exchange rate, thus, 1 / 1.2983 = approximately 0.7705 CHF/EUR.

Therefore, the indirect exchange rate from the executive's perspective would be approximately:
a) 0.7705
This represents the amount of Swiss Francs one can receive for every 1 Euro.