The reason why I am asking is because it makes a difference in how you answer questions.
EOC Reading 40 Question #8, they ask you to calculate the IRP and its in the perspective of a US investing in Japan. So i assumed that the US rate was domestic and the JPN was foreign, however the spot rate was in the "direct quote" so they inverted the IRP formula (1+f)/(1+D)
Anyways, just a really tricky / easy mistake to make....
So to understand..... the first currency mentioned (JPN) is the domestic quote for a Japanese investor and the foreign quote for a US investor. Aka direct and indirect? |