Question

1. Mississippi Mud Pies, Inc. needs to buy 1,000,000 Swiss francs (CHF) to pay its Swiss chocolate supplier. Its banker quotes bid–ask rates of CHF1.3990–1.4000/USD. What will be the dollar cost of the CHF1,000,000?

Answer 1

$714,796.28

Step-by-step explanation:

The computation of the dollar cost of the CHF1,000,000 is shown below:

= Number of Swiss francs buys ÷ banker quotes bid–ask rates

= 1,000,000 Swiss francs ÷ CHF 1.3990/USD

= $714,796.28

Simply we divide the Number of Swiss francs buys by the banker quotes bid–ask rates so that the dollar cost of the CHF1,000,000 could come.