Looking for the answer to the question below related to Financial Management ?
Inverse quote for “1GBP = 99.1100/9900 INR is INR GBP____________
Options:
| A. 0.0101/0.0100 B. 0.0100/0.0105 C. 0.0105/0.0100 D. 0.0100/0.0101 |
The Correct Answer Is:
- D. 0.0100/0.0101
The given quote “1 GBP = 99.1100/9900 INR” represents an exchange rate between the British Pound (GBP) and the Indian Rupee (INR). This exchange rate tells us that one British Pound (GBP) is equivalent to “99.1100/9900” Indian Rupees (INR). To find the inverse exchange rate, we need to determine how many British Pounds (GBP) you can get for one Indian Rupee (INR).
The inverse exchange rate is a crucial concept in the world of foreign exchange, as it allows you to understand the value of one currency in terms of another. In this case, we need to calculate the reciprocal of the given exchange rate to find the value of 1 INR in GBP.
To calculate the inverse exchange rate, follow these steps:
1. Calculate the Reciprocal of the Given Exchange Rate:
To find the reciprocal of a fraction, you flip the numerator and denominator. In this instance, the given exchange rate is “99.1100/9900 INR.” Therefore, the reciprocal of this rate is “9900 INR/99.1100.”
2. Simplify the Fraction:
In this step, we simplify the fraction “9900 INR/99.1100.” To do this, we can divide both the numerator and denominator by a common factor, such as 99.1100.
9900 INR / 99.1100 = (9900 / 99.1100) INR
Simplifying the fraction: 9900 / 99.1100 ≈ 99.9990
So, the simplified reciprocal rate is “99.9990 INR.”
3. The Result:
The reciprocal rate “99.9990 INR” tells us how many Indian Rupees you can get for 1 British Pound (GBP). However, we want to determine the value of 1 INR in GBP, so we take the reciprocal again.
4. Calculate the Inverse Exchange Rate:
To find the inverse exchange rate, we take the reciprocal of “99.9990 INR.”
Inverse exchange rate = 1 / (99.9990 INR)
1 / 99.9990 INR = 0.01 GBP
So, the inverse exchange rate is “1 INR = 0.01 GBP.” This can also be represented as “0.01/1.0000 GBP.”
Now, let’s examine the options provided and explain why they are correct or incorrect:
A. 0.0101/0.0100:
This option suggests that 1 INR is equivalent to 0.0101 GBP, and the inverse rate is 1 GBP = 0.0100 INR. This is not correct. The correct inverse rate, as calculated earlier, is 1 INR = 0.01 GBP.
B. 0.0100/0.0105:
Option B implies that 1 INR is equivalent to 0.0100 GBP, and the inverse rate is 1 GBP = 0.0105 INR. This is also incorrect. The correct inverse rate is 1 INR = 0.01 GBP.
C. 0.0105/0.0100:
This option suggests that 1 INR is equivalent to 0.0105 GBP, and the inverse rate is 1 GBP = 0.0100 INR. However, this is not accurate. The correct inverse rate is 1 INR = 0.01 GBP.
D. 0.0100/0.0101:
This is the correct option. It indicates that 1 INR is equivalent to 0.0100 GBP, and the inverse rate is 1 GBP = 0.0101 INR. While the given exchange rate is not exactly 0.0100/0.0101, the rounding difference is negligible and within the acceptable margin of error.
In summary, the correct inverse exchange rate for “1 GBP = 99.1100/9900 INR” is “1 INR = 0.01 GBP,” which can also be expressed as “0.01/1.0000 GBP.” This means that for every 1 Indian Rupee (INR), you can acquire 0.01 British Pounds (GBP). The other options do not accurately represent the inverse exchange rate and are, therefore, incorrect.
The correct answer is option D: 0.0100/0.0101. This option correctly reflects the inverse relationship between the British Pound and the Indian Rupee, where 1 INR is equivalent to 0.01 GBP.
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