^I never understood what that is supposed to mean, but ok.
If you go up the bid you turn the currency in the denominator into the currecny in the numerator. If you go down the ask you turn the numerator into the denomiator.
I see, that does make sense. Thanks mwvt.
hmm, learn something new every time thanks
But you’re not the dealer, you are the FOREX market participant.
McLeod81 Wrote: ------------------------------------------------------- > But you’re not the dealer, you are the FOREX > market participant. now that I’ve seen the expl. it makes sense
I feel retarded about the up the bid down the ask thing. I never have had a problem with it until now when I apply that method. We are given $/NT and /Yen If we start with 10,000,000 NT we "up the bid" and use the bid rate, so now we have dollars, when the "down the ask" to turn into yen. I am going to call it a night when someone points out my blatant mistake.
Actually, in this problem you would go down the ask if it was set up in the normal way. Since we are given the end point (NT) and not the beginning (Y) we have to go backwards. I actually went up the ASK, as you can see above, in order to get the Yen amount. If you were given 32,489,833 Y (which he holds) and were asked to convert it to NT (which he wants), you would go down the ask to get 10,000,000 NT
Thanks for pointing that out. I tried it and it works. I need to be aware of this from now on.
I make yen X X * 0.008852 / 0.02876 = 10 M. Then solve for X, it is easier to think this way. No hard work.
you just got to stick to the basics, don’t change the bid or ask… just use the 1/x button on your calculator and follow the arbitrage pricing triangle.
It took me 40 secs to do this. Start with 10,000,000 $NT. NT 10,000,000 \* .02874 = 287,400 $287,400 / .008856 = 32,452,575 Yen Hence C =) Keep it simple guys. Anish
anish…i used the same method…except you’re using the wrong rates…answer is D NT 10,000,000\* .02876 = 287600 $287,600 / .008852 = 32,489,832.81 Yen hence D
mumu, If we have $287,400 then to convert it to Yen wouldn’t be divide by the ask rate?? Bid-up / Ask-down rule?? Correct me here if I am missing something. Thanks Anish
think of it from the other point of view… you want - to eventually get to NT so you would be giving up Yen to get dollars…since you always get the worse rate you’d be getting .008852 dollars for every Yen you give the bank…not .008856
This is what I’m saying Anish! Pretty easy question, to do and to mess up.
Right, got it. CRAP…Where is my coffee… Thanks guys, nice question.
I got D, but in a really screwy way. I converted the NT to and then the to Y. It took a little longer, but that is the only way I can figure out the “up the bid” rule. I hope this works game day.