Question 5 (1 point) Assume that you are a British investor. In the foreign exchange market,...

Question 5 (1 point)

Assume that you are a British investor. In the foreign exchange market, which of the following would be a direct quote?

Question 5 options:

$0.90/

£0.55/

SF2.40/£

$1.50/£

Question 6 (1 point)

Assume that a bank's bid rate on Japanese yen is $.0041 and its ask rate is $.0043. Its bidask percentage spread is about:

Question 6 options:

4.99%.

4.43%.

4.88%.

4.65%.

Solutions

Expert Solution

Question 5

For a British investor, the exchange rate with price currency as the British pound and the foreign currency as the base currency is the direct quote.

Option b) is correct as this is expressed as £ 0.55/$, with £ as the price currency and $ as the base currency.

The other answer options are incorrect because they all have £ as the base currency

Question 6

Bidask percentage spread = (Ask - Bid)/Ask

Bidask percentage spread = (0.0043 - 0.0041)/0.0043

Bidask percentage spread = 0.0002/0.0043

Bidask percentage spread = 0.04651162791

Bidask percentage spread = 4.65%

jeff jeffy answered 2 years ago

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