Final answer:
The bid/ask quote in USD/CAD for a bid/ask of 0.7702/04 CAD/USD, after inverting the currency pair, would be closest to 1.2982/1.2985, which is option (d).
Step-by-step explanation:
If the bid/ask quote from a dealer was 0.7702/04 CAD/USD, then to find the bid/ask quote in USD/CAD, we must take reciprocals of both the bid and ask rates since we are inverting the currency pair. This inversion is necessary because exchange rates measure the price of one unit of currency in terms of a different currency.
Reciprocals of 0.7702 and 0.7704 are calculated as follows:
- Bid: 1 / 0.7702 = 1.2982
- Ask: 1 / 0.7704 = 1.2985
Therefore, the bid/ask quote in USD/CAD would be 1.2982/1.2985, equating to option (d).
Exchange rates can fluctuate significantly over time. For instance, a U.S. dollar could vary in worth from $1.15 to $1.60 in Canadian currency over different years, impacting prices and purchase decisions, as seen by changes in the value of goods such as cars.