IGCSE Money Conversions: Complete Guide for Cambridge IGCSE Mathematics

IGCSE money conversions are practical topics in Cambridge IGCSE Mathematics that appear in both Paper 2 and Paper 4. Mastering currency exchange rates, conversion calculations, and commission fees is essential for solving real-world financial problems and achieving top grades.

This comprehensive IGCSE money conversions guide covers everything you need to know, including converting between currencies, calculating exchange rates, handling commission, step-by-step worked examples, common exam questions, and expert tips from Tutopiya’s IGCSE maths tutors. We’ll also show you how to avoid the most common mistakes that cost students valuable marks.

🎯 What you’ll learn: By the end of this guide, you’ll know how to convert between different currencies, calculate exchange rates, handle commission fees, and apply these skills to solve problems in IGCSE exams.

Already studying with Tutopiya? Practice these skills with our dedicated IGCSE Financial Mathematics practice deck featuring exam-style questions and instant feedback.

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Why IGCSE Money Conversions Matter

IGCSE money conversions are practical topics with real-world applications. Here’s why they’re so important:

• High frequency topic: Currency conversion questions appear regularly in IGCSE maths papers
• Real-world applications: Essential for travel, international trade, and financial transactions
• Exam weight: Typically worth 4-6 marks per paper
• Practical skills: Develops financial literacy and proportional reasoning
• Foundation for advanced topics: Essential for understanding ratios and percentages

Key insight from examiners: Students often confuse which direction to multiply or divide, or forget to account for commission. This guide will help you master these systematically.

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Understanding Exchange Rates

An exchange rate tells you how much of one currency equals a certain amount of another currency.

Example: If the exchange rate is 1 USD = 0.85 EUR, this means:

• 1 US Dollar = 0.85 Euros
• To convert USD to EUR: multiply by 0.85
• To convert EUR to USD: divide by 0.85

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Converting Between Currencies

Method 1: Using Exchange Rate

To convert Currency A to Currency B:

• If rate is given as “1 A = X B”: multiply by X
• If rate is given as “1 B = Y A”: divide by Y

Example 1: Convert $500 USD to EUR if 1 USD = 0.85 EUR

Solution: $500 × 0.85 = €425

Answer: €425

Example 2: Convert €600 EUR to USD if 1 USD = 0.85 EUR

Solution: Since 1 USD = 0.85 EUR, we have 1 EUR = 1/0.85 USD = 1.176 USD €600 × 1.176 = $705.88

Alternative method: €600 ÷ 0.85 = $705.88

Answer: $705.88

Method 2: Using Proportion

Set up a proportion and solve.

Example: Convert £300 to USD if 1 GBP = 1.25 USD

Solution: 1 GBP / 1.25 USD = £300 / x USD x = £300 × 1.25 = $375

Answer: $375

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Exchange Rates with Commission

Many currency exchanges charge a commission fee, usually a percentage of the amount converted.

Method

1. Calculate the conversion without commission
2. Calculate the commission (percentage of amount)
3. Subtract commission from the amount received (or add to amount paid)

Example: Convert $1,000 USD to EUR if:

• Exchange rate: 1 USD = 0.85 EUR
• Commission: 2% of the amount received

Solution:

1. Conversion: $1,000 × 0.85 = €850
2. Commission: 2% × €850 = €17
3. Amount received: €850 - €17 = €833

Answer: €833

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Two-Way Conversions

Sometimes you need to convert in both directions.

Example:

• Exchange rate: 1 GBP = 1.30 USD
• Convert £500 to USD
• Then convert the USD back to GBP (using the same rate)

Solution:

1. GBP to USD: £500 × 1.30 = $650
2. USD back to GBP: $650 ÷ 1.30 = £500

Note: Without commission, you get back the original amount. With commission, you lose money on the round trip.

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Step-by-Step Method for Money Conversion Problems

1. Identify the currencies - What are you converting from and to?
2. Find the exchange rate - Which direction is it given?
3. Determine the operation - Multiply or divide?
4. Apply the conversion - Calculate carefully
5. Account for commission - If applicable
6. Check your answer - Does it make sense?

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Worked Examples

Example 1: Basic Conversion

Convert $800 USD to GBP if 1 GBP = 1.40 USD

Solution: $800 ÷ 1.40 = £571.43

Answer: £571.43

Example 2: Reverse Conversion

Convert €450 EUR to USD if 1 USD = 0.90 EUR

Solution: €450 ÷ 0.90 = $500

Answer: $500

Example 3: With Commission

Convert £600 to USD if:

• Exchange rate: 1 GBP = 1.35 USD
• Commission: 1.5% of amount received

Solution:

1. Conversion: £600 × 1.35 = $810
2. Commission: 1.5% × $810 = $12.15
3. Amount received: $810 - $12.15 = $797.85

Answer: $797.85

Example 4: Finding Exchange Rate

If $500 USD converts to €425 EUR, find the exchange rate (USD to EUR).

Solution: $500 = €425 1 USD = €425/500 = €0.85

Answer: 1 USD = 0.85 EUR

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Common Examiner Traps (and How to Dodge Them)

• Wrong direction - Check if rate is “A to B” or “B to A”
• Forgetting commission - Always check if commission applies
• Commission on wrong amount - Usually on amount received, not original
• Rounding errors - Money usually to 2 decimal places
• Confusing multiply/divide - If “1 A = X B”, multiply A by X to get B
• Reverse conversion errors - Divide instead of multiply (or vice versa)

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IGCSE Money Conversions Practice Questions

Question 1: Basic Conversion

Convert $1,200 USD to EUR if 1 USD = 0.88 EUR

Solution: $1,200 × 0.88 = €1,056

Answer: €1,056

Question 2: Reverse Conversion

Convert €750 EUR to USD if 1 USD = 0.88 EUR

Solution: €750 ÷ 0.88 = $852.27

Answer: $852.27

Question 3: With Commission

Convert £400 to USD if:

• Exchange rate: 1 GBP = 1.32 USD
• Commission: 2% of amount received

Solution:

1. Conversion: £400 × 1.32 = $528
2. Commission: 2% × $528 = $10.56
3. Amount: $528 - $10.56 = $517.44

Answer: $517.44

Question 4: Finding Rate

If £300 converts to $390, find the exchange rate (GBP to USD).

Solution: £300 = $390 1 GBP = $390/300 = $1.30

Answer: 1 GBP = 1.30 USD

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Frequently Asked Questions About IGCSE Money Conversions

How do I convert from Currency A to Currency B?

If the rate is “1 A = X B”, multiply the amount in A by X to get B. If the rate is “1 B = Y A”, divide the amount in A by Y to get B.

What if commission is charged?

Calculate the conversion first, then subtract (or add) the commission from the final amount.

How do I find the exchange rate?

Divide the amount in the target currency by the amount in the original currency.

Which direction do I multiply or divide?

• If rate is “1 A = X B”: multiply A by X to get B
• If rate is “1 B = Y A”: divide A by Y to get B

How do I convert back to the original currency?

Use the inverse operation. If you multiplied to convert, divide to convert back (and vice versa).

What if the exchange rate is given in a different format?

Always identify which currency equals 1 unit of the other, then apply the appropriate operation.

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Related IGCSE Maths Resources

Strengthen your IGCSE Mathematics preparation with these comprehensive guides:

• IGCSE Earnings, Simple and Compound Interest: Complete Guide - Master financial calculations
• IGCSE Fractions, Decimals and Percentages: Complete Guide - Master conversions and calculations
• IGCSE Maths Revision Notes, Syllabus and Preparation Tips - Complete syllabus overview, topic breakdown, and revision strategies
• IGCSE Past Papers Guide - Access free IGCSE past papers and exam resources

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Next Steps: Master IGCSE Money Conversions with Tutopiya

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