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$0.555/GBP is:

A)

a direct quote in Great Britain.

B)

an indirect quote in Great Britain.

C)

an indirect quote in the U.S.

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$0.555/GBP is:

A)

a direct quote in Great Britain.

B)

an indirect quote in Great Britain.

C)

an indirect quote in the U.S.




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.

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If the bid is $1.8709/GBP and the ask is $1.8841/GBP, what is the bid?ask spread in GBP/USD?

A)

0.5345 ? 0.5407.

B)

0.5308 ? 0.5345.

C)

1.8841 ? 1.8709.

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If the bid is $1.8709/GBP and the ask is $1.8841/GBP, what is the bid?ask spread in GBP/USD?

A)

0.5345 ? 0.5407.

B)

0.5308 ? 0.5345.

C)

1.8841 ? 1.8709.




The bid-ask spread in European terms is foreign currency per dollar (FC/$) so you are being asked to convert the bid?ask spread to GBP/$. To convert to GBP/$ just take the reciprocal of each number and reverse the bid?ask spread.

1 / ($1.8709/GBP) = 0.5345 GBP/$ and 1 / ($1.8841/GBP) = 0.53076 GBP/$. The bid?ask spread is now 0.5308 ? 0.5345.

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thanks

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re

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