Up Bid and down Ask

CFA Level II
#1

Dear All:

I listened to the Schesser video lecture for the economic part and the instructor says something like up bid down ask. I am so confused about this concept. Really appreciate some explanation.

Thanks

#2

this is how you calculate cross rates with bid ask spreads. you have your triangle and three currencies. you set up your rates as you did with non bid ask cross rate calculation but now you have two quotes for each currency (bid and ask). in order to figure out which one you multiply by to convert to the next currency you use up the bid down the ask. so if your quote is USD:CAD and you are coverting to CAD then the ratio has CAD on top and USD on the bottom. you want to go from USD to CAD you are going up so you use the bid quote. if you were going from CAD to USD you are going down so use the ask.

#3

Thank you so much