Saunders Ch. 13 Q&A 5

[bpdulog]

Hello,

I came across this question:

5.. The spot foreign currency exchange rate is EUR/USD $1.4296/$1.4304. Each of the following is true about this quote except: a) The spread is 8 pips b) If the domestic currency is the US dollar (USD), from the perspective of an American trader, as EUR is the base currency and the USD is the quoted currency, this is direct quote c) We can buy one Euro for $1.4304 and sell one Euro for $1.4296 d) If the spot rate changes to EUR/USD $1.4416/$1.4424, then the EUR has weakened and the USD has strengthened

Using from the notes:

"Indirect quote (Currency per US$)  Foreign currency per one US dollar; e.g., 1.1015 CAD / $USD"

From the perspective of an American, since the currency is on the bottom, isn't this an indirect quote and B is wrong?

 

[Nicole Seaman]

Hello @bpdulog,

Please use the forum links that are provided in all of the practice question sets. The forum links that we provide direct you to the original forum post where other members have discussed those specific questions. You may also find that your question has already been answered. We also use the original forum links to keep our forum organized and free of duplicate questions and threads. Please let me know when you have copied your question over to the original forum post here so I can delete this thread: https://forum.bionicturtle.com/threads/l1-t3-191-foreign-exchange-exposure.4680/#post-12342

Thank you

Nicole

 

[bpdulog]

Hi @Nicole Manley

There are no forum links for Study Notes Q&A, but I moved the question over

 

[Nicole Seaman]

Hello @bpdulog

Thank you for pointing out that you were referencing the study notes. You are correct that there are no forum links within the study notes. I incorrectly assumed you were referencing the practice question set because this question is included in the question set also. Many times, you can find a forum link by just copying the first few words of the question and pasting in our search function on the forum. This is just helpful because you wouldn't have to wait for an answer if your question has already been asked

Nicole