Presentation is loading. Please wait.

Presentation is loading. Please wait.

Produced by MEI on behalf of OCR © OCR 2013 Introduction to Quantitative Methods Foreign Exchange.

Similar presentations


Presentation on theme: "Produced by MEI on behalf of OCR © OCR 2013 Introduction to Quantitative Methods Foreign Exchange."— Presentation transcript:

1 Produced by MEI on behalf of OCR © OCR 2013 Introduction to Quantitative Methods Foreign Exchange

2 Produced by MEI on behalf of OCR © OCR 2013 Buying from a website A website based in the United States will deliver to the UK. The website can show prices in either pounds or dollars. How are the prices in pounds calculated? Woman’s watchMan’s watch Price in dollars$75$275 Price in pounds£55.83£204.72

3 Produced by MEI on behalf of OCR © OCR 2013 Converting currencies If $75 is equivalent to £55.83 then what would $90 be equivalent to in pounds? Can you think of more than one way to work this out? Do they all give the same answer?

4 Produced by MEI on behalf of OCR © OCR 2013 Estimating $75 = £55.83 If $1 and £1 were the same, $75 would be £75 but it is worth less than this. If $1 was the same as £0.50 then $75 would be £37.50 but it is worth more than this. Half way between £75 and £37.50 is £56.25; £55.83 is fairly near to this.

5 Produced by MEI on behalf of OCR © OCR 2013 Estimating If $75 is equivalent to £55.83 then what would $90 be equivalent to in pounds? Estimate what $90 would be equivalent to in pounds. Explain your method.

6 Produced by MEI on behalf of OCR © OCR 2013 Scaling Some people find it helpful to use a table and work in stages when doing currency conversions. Dollars7590 Pounds55.83 You know what $75 stands for. You want to know what $90 stands for. What can you work out that might help?

7 Produced by MEI on behalf of OCR © OCR 2013 Scaling Dollars752590 Pounds55.8318.61 One possibility is working out what $25 is worth. What would be helpful next? 33 33

8 Produced by MEI on behalf of OCR © OCR 2013 Scaling Dollars7525590 Pounds55.8318.613.722 You might work out how much $5 is worth. This involves fractions of a penny but it is not the final answer so don’t round yet. 55 55

9 Produced by MEI on behalf of OCR © OCR 2013 Scaling Dollars752551090 Pounds55.8318.613.7227.444 Now you can work out what $10 stands for. This involves fractions of a penny but it is not the final answer so don’t round yet. 22 22

10 Produced by MEI on behalf of OCR © OCR 2013 Scaling Dollars752551090 Pounds55.8318.613.7227.44466.996 Now you can work out what $90 stands for. This is the final answer so round to the nearest penny to give £67. 99 99

11 Produced by MEI on behalf of OCR © OCR 2013 Dollars752551090 Pounds55.8318.613.7227.44466.996 Notice that the graph of dollars against pounds from the working is a straight line through the origin. $0 is the same as £0. Every time the amount in dollars goes up by 1, the amount in pounds goes up 0.7444

12 Produced by MEI on behalf of OCR © OCR 2013 Finding what $1 is worth You can use the idea of multipliers to find out what $1 is worth in pounds. $75 = £55.83 $1 = £  75 You know what 75 times as much as $1 is worth in pounds.

13 Produced by MEI on behalf of OCR © OCR 2013 Finding what $1 is worth To find what $1 is worth in pounds, divide by 75. $75 = £55.83 $1 = £  75  75 55.83  75 = 0.7444 so $1 = £0.7444. This is not the final answer so do not round.

14 Produced by MEI on behalf of OCR © OCR 2013 Using what $1 is worth To find what $90 is worth in pounds, multiply by 90. $90 = £66.996 $1 = £0.7444  90 This is the final answer so round to the nearest penny. $90 is worth £67.

15 Produced by MEI on behalf of OCR © OCR 2013 A note on rounding When estimating, it makes sense to round to make the numbers easier – you are not looking for an exact answer. You just want a rough idea. If you want an exact answer then do not round until you have got the final answer.


Download ppt "Produced by MEI on behalf of OCR © OCR 2013 Introduction to Quantitative Methods Foreign Exchange."

Similar presentations


Ads by Google