You are the vice president of International InfoXchange, headquartered in Chicago. All shareholders of the firm live in the United States.
Earlier this month, you obtained a loan of 5 million Canadian dollars from a bank in Toronto to finance the construction of a new plant in Montreal. At the time the loan was received, the exchange rate was 75 U.S cents to the Canadian dollar.
By the end of the month, it has unexpectedly dropped to 70 cents. Has your company made a gain or loss as a result, and by how much?
Suppose the exchange rate between U.S. dollars and the Swiss franc is Sfr1.6 = $1 and the exchange rate between the dollar and the British pound is 1 = $1.50. What then is the cross rate between francs and pounds?