In this example, we're looking at David. David has 100,000 Swiss francs and he wants to buy Canadian dollars. This pair is not directly traded, so he'll have to go via the Euro. We have a Swiss franc to Euro exchange rate and a Euro to Canadian dollar exchange rate. How many Canadian dollars will you get and what is the Swiss francs to Canadian dollar exchange rate? A couple of different ways we can calculate this. The first alternative is to just simply calculate the cross rate here. So the cross rate would simply be the Swiss francs to Euro times the Euro to Canadian dollars. So the cross rate here is 1.1118. He's got 100,000 Swiss francs, and therefore the number of Canadian dollars is the exchange rate, the cross rate times the number of Swiss francs. So we'll end up with 111,175.3 Canadian dollars. Let's look at one more way to figure this out.

So first of all, we're gonna say, Hey, he has 100,000 Swiss francs. What if he actually exchanges that to Euro? What would he get? Well, he would get the Swiss Euro exchange rate that we have typed down earlier in the workout times the 100,000 Swiss francs he's got. So he would first exchange his money into Euros and he would get 82,979 Euros. Then he would go from Euros to the Canadian dollars. So we'd take his Euros and change them to the Canadian dollars using the Euro Canadian dollar exchange rate. So that would give him 111,175.3 So the same amount of course, as in the first example here we're just showing us taking the round trip via the Euro. So of course the exchange rate here would be exactly the same as what we've seen before, 1.1118.