1.If the bid is $1.8709/GBP and the ask is $1.8841/GBP, what is the bid-ask spread in GBP/USD? A) 0.5345 - 0.5407. B) 1.8841 - 1.8709. C) 0.5345 - 0.0800. D) 0.5308 - 0.5345. The correct answer was D) The bid-ask spread in European terms is foreign currency per dollar (FC/$) 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. 2.$0.555/GBP is: A) a direct quote in Great Britain. B) an indirect quote in Great Britain. C) an indirect quote in the U.S. D) a European quote. The correct answer was B) In country X, an indirect quote is foreign currency over domestic currency, or FC/DCX. The quote 0.55500$/GBP is FC/DC (or indirect) to an investor in Great Britain and DC/FC (or direct) to an investor in the United States. 3.An indirect quote for pesos to a $U.S. investor is 8.00-8.50. If you have $100, how many pesos will you be able to buy? A) 11.8. B) 12.5. C) 850. D) 800. The correct answer was D) Use the following steps to calculate this result: Step 1: Put the quote in direct terms. (Remember: The bid will become the ask and the ask will become the bid). Bid: 1.00000 / 8.50000peso/$ = 0.11765$/peso
Ask: 1.00000 / 8.00000peso/$ = 0.12500$/peso
Step 2: Calculate how many pesos can be purchased for $100.00 Since we are buying pesos, we have to buy at the ask price of 0.12500$/peso. 100.00000$ / 0.12500$/peso = 800pesos. Alternate method: For the examination, remember that the bank must make its profit through the bid-ask spread (the foreign-exchange market is typically transaction-fee free), so you will always buy at the "high" price and sell at the "low price." Here, the "high" price is 8.00000peso/$ (At 8.00000peso/$ the peso is worth more than at 8.50000peso/$). 100.00000$ × 8.00000peso/$ = 800.00000peso 4.If the indirect quote for U.S. dollars in Sydney is 0.7927, what is the equivalent indirect quote in New York City for Australian dollars? A) 0.3964. B) 1.2615. C) 1.5854. D) 0.7927. The correct answer was B) Indirect quotes are foreign currency per domestic currency or FC/DC. An indirect quote in Sydney for USD of 0.7927 means 0.7927USD/AUD which equals an indirect quote in New York City of 1AUD/0.7927USD = 1.26AUD/USD. 5.The direct quote method is: A) 1/(DC/FC). B) FC/DC. C) FC/DC +1. D) DC/FC. The correct answer was D) Direct quotes are the usual method of quoting currencies. Indirect quotes are used in the U.K., Canada, and U.S.
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发表于 2008-4-29 13:46
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