Need to find bid-offer on the NZD/GBP cross-rate implied by Exhibit 1 is closest to:
Way I solved it is below : My approach is to get at NZD/GBP = NZD/EUR x EUR/GBP.
Breaking down into steps (so you can help spot my error!)
→ EUR/NZD given as 1.7014/1.7018. Which means inverting to get NZD/EUR = (1/1.7018) / (1/1.7014)
So, NZD/EUR = 0.5876/0.5878…a
→ GBP/EUR given as 0.8593/0.8594. Which means inverting to get EUR/GBP= (1/0.8594) / (1/0.8593)
So, EUR/GBP= 1.1636/1.1637…b
Please note the answer has a small error (from the comment section) Watch out for the NZD/EUR (Bid) term in the Offer calculation, it’s a typo. Should be NZD/EUR (offer).
Lastly, if I may add my interpretation : tallying the solution to the question, I think the rate given is the NZD/EUR and NOT the EUR/NZD. Eur>nzd just feel wise and a quick search confirms 1 eur = 1.8 NZD. So it is infact the rates which are mentioned wrong
