Question

My name is Maurice. I have $45,000 in FXCM (Foreign Exchange Market). I am considering converting dollar to Euro now. The rate I apply now (first exchange rate conversion) is 0.92 Euro/$. In the evening, I bet the rate will be favorable to me. Let's assume there are no service fees about this process. If I strongly believe in my speculation, and I want to make at least $1000 profit from this process, what should be the exchange rate for the 2nd conversion to meet my profit target? (Rounding: 1/100, e.g. .468 -> .47)

Answer 1

Answer:

1.11 Euro/$

Explanation:

$45,000 converted to Euro a rate of 0.92 Euro/$ = 45,000 X 0.92 = 41,400 Euro.

To make a profit of at least $1000, we want to determine the rate at which 41,400 Euro will be at least $46,000.

Let the exchange rate =x

41400 X x= 46000

x=46000÷41400

x=1.11

To make a profit of at least $1000, the exchange rate must not be less than 1.11 Euro/$