Yes, I am re-posting this question under a different topic name in the hopes that someone will help me. this is driving me nuts. Without posting copyrighted material, I’ll attempt to paraphrase a question from BSAS mock: "The X/Y exchange rate is quoted at 1.234/1.246. What is the spread for the indirect quote in country X? Here is the way I tackled this question, someone PLEASE tell me where I went wrong: Ok, so the rate is in X/Y, so it’s a direct quote in country X. In order to get the indirect quote in country X, I took the reciprical of each and made the bid the ask and the ask the bid. So for the made up numbers above, that would equate to an indirect quote in country X of .80256/.81037. With me so far? Then the spread is simply (ask-bid) / ask. Simple, right? Level I stuff. It says I was WRONG, and the the right answer is to take 1.246-1.234/1.246, which in this case would be .009. How is that a spread for the indirect quote?? Isn’t that the spread for the DIRECT quote? Am I going crazy? Any help is appreciated.
Don’t worry about it, Smarshy. It’s a badly worded question.