I don’t understand these 3, hopefully someone with a strong understanding can explain Given the following currency conversion table, answer the following questions: …EUR…USD… BRL EUR…0.70928…0.38022 USD…0.70917…0.53608 BRL…0.37901…0.53444… 1) The bid-ask for USD in terms of EUR is 0.70917 - 0.70928 USD:EUR. This would be a direct quote for dollars to someone in: a) France b) Great Britain c) The United States 2) Using the table provided by the currency dealer, John would calculate an indirect quote bid-ask from the perspective of a Euro holder that is closest to: a) 0.70928 - 0.70917 b) 1.40988 - 1.41010 c) 1.41010 - 1.40988 3) John wishes to check the BRL:USD quote as the cross-quote of EUR:USD and BRL:EUR quotes. The BRL:USD quote he will calculate is closest to: a) 0.26968 b) 0.53606 c) 0.53615 THANKS IN ADVANCE
- A - it is quoted as Euro/, which is a direct quote of Euros in terms of . 2) B - Simple. it’s the reciprocal of the USD:EUR FX rates. Smaller number goes on the left (bid). 3) C - Not sure about this one, my calc shows .5391. I got that using .70298/.37901 and took the reciprocal of that.
- C - Direct is how much Domestic currency it takes to buy the foreign 2) B - For indirect bid-ask spread you reciprical and switch bid and ask, e.g. 1/.70928=bid 3) I’m not quite sure how to read the table or what they are asking for exactly, but I would say C, I may be wrong though BRL:USD(ask)= EUR:USD(ask) / EUR:BRL(bid) = (1/.70928) / (1/.37091) = .52293 BRL:USD(bid)= EUR:USD(bid) / EUR:BRL(ask) = (1/.70917) / (1/.38022) = .53614
Sorry correction 1 is A
cheros16 Try this 1. A quote of say USD:EUR is called the base : counter currency convesion Quotes are given in terms of 1 unit of base currency in terms of the counter i.e. 1 USD in terms of EUR Direct quote is always from the perscipective of the counter currency in this case EUR indirect quate is always from the perspective of the base i.e. USD 1 0.70917 - 0.70928 USD:EUR. This would be a direct quote for dollars in France ( EUR) so A 2.indirect quote bid-ask from the perspective of a Euro holder would just be the invese of the direct quote so B " remember to change the bid -ask positions when you inverse 3 cross-quote of EUR:USD and BRL:EUR, base currencies are different; 1. divide, 2, which currency goes on top? Look at what you are trying to get in this case, BRL:USD so put the one with the BRL base currency on top .38022 BRL PER EUR divide by .70920 Usd per EUR = .5361 , C ?? if base currencies in EUR:USD and BRL:EUR were the same you would multiply
- A, 2)B 3) 1.41 * .38002 = .5361, C.
AudreyMwala Wrote: ------------------------------------------------------- > cheros16 > Try this > 1. A quote of say USD:EUR is called the base : > counter currency convesion > Quotes are given in terms of 1 unit of base > currency in terms of the counter i.e. 1 USD in > terms of EUR > Direct quote is always from the perscipective of > the counter currency in this case EUR > indirect quate is always from the perspective of > the base i.e. USD > > 1 0.70917 - 0.70928 USD:EUR. This would be a > direct quote for dollars in France ( EUR) so A > 2.indirect quote bid-ask from the perspective of a > Euro holder would just be the invese of the direct > quote so B " remember to change the bid -ask > positions when you inverse > > > 3 cross-quote of EUR:USD and BRL:EUR, base > currencies are different; 1. divide, 2, which > currency goes on top? Look at what you are trying > to get in this case, BRL:USD so put the one with > the BRL base currency on top > > .38022 BRL PER EUR divide by .70920 Usd per EUR = > .5361 , C ?? > > if base currencies in EUR:USD and BRL:EUR were the > same you would multiply Hey Audrey Thanks. Question though: is the fact that XXX:YYY, therefore its an Indirect quotation for XXX and a direct quotation for YYY ALWAYS hold? I feel like it depends from who’s perspective its from. no?
I am still having a hard time with this too… A quote of EUR/USD = 1.2 or as I pronounce it 1.2 Euros per USD… Converting 1 USD to euros… how is it not simply 1.2??