$0.555/GBP is: A) a direct quote in Great Britain. B) an indirect quote in the U.S. C) an indirect quote in Great Britain.
To a resident of GB, this is a direct quote correct.
Depends on what the / means. Does it mean divide? If so, this is equivalent to GBP : USD. So it’s a direct quote of the counter currency (USD) and an indirect quote of the base currency GBP.
Your answer: A was incorrect. The correct answer was C) an indirect quote in Great Britain. In country X, an indirect quote is foreign currency over domestic currency, or FC/DCX. The quote 0.55500$/GBP is FC/DC (or indirect) to an investor in Great Britain and DC/FC (or direct) to an investor in the United States. Question threw me for a loop. No indication of the POV. But, for a resident of the USA, this is an indirect quote. For a resident of GB, this is a direct quote.
C
Simple. C.
0.555/GBP is a direct quote for GBP. It is same as GBP : = 0.555 It’s also an indirect quote for the dollar. To have a direct quote currency must be in the bottom.
I hate how Q-Bank often mixed the / with : in currency questions. The good thing is, CFAI is pretty consistent about the notation. So if you see / on the exam, it really means divide.
Dreary Wrote: ------------------------------------------------------- > 0.555/GBP is a direct quote for GBP. \> It is same as GBP : = 0.555 > > It’s also an indirect quote for the dollar. To > have a direct quote currency must be in the > bottom. Good, that is what I thought. I’ve started studying too early!
So, what is this quote for a U.S. resident? GBP : $ = 0.555
It is the quote for a US resident. .555/GBP is the same as GBP: .555
yeah, but is it direct or indirect for the dollar? And for the GBP?
direct for the $ and indirect for GBP
If you live in the USA, this is an indirect quote for the dollar. If you live in GB, this is a direct quote for the GBP.
forget where you live…both quotes are direct for USD
> direct for the $ and indirect for GBP Based on the above, it is a direct quote for the GBP in the U.S!! And indirect quote for the dollar in the U.S.!!
So, it’s a direct quote for the foreign currency *only* if the home currency is on top, it seems. Right?
Whats the price for taking CFA L2 exam? US$ 690 Whats the price for 1 GBP? US$ .55 Treat another currency as a COMMODITY!
I broke out my CFAI book to double check. Am I crazy, or is this question contradictory? The direct method of foreign exchange quotations: A) is used primarily in the U.K., Canada, and the U.S. B) quotes the domestic currency per unit of foreign currency: DC/FC. C) quotes the foreign currency per unit of domestic currency: FC/DC. Your answer: C was incorrect. The correct answer was B) quotes the domestic currency per unit of foreign currency: DC/FC. The direct method of foreign exchange quotations is quoted as DC/FC.
This quote – .55USD/GBP is the same as GPB: .55USD and both are direct for USD. Don’t think about top and bottom. When I see the “:” sign I always switch it to the “/” sign. So, if you think of top, the in the “/” quote, then, yes, a direct quote is the currency on top. In the econ section they use the “:” and in other sections they use “/” … adding to the confusion.