- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 1. Foreign Exchange Spot Markets
CFA Practice Question
The bid-ask quote for Russian Ruble is $31.4762-31.4778. What is the spread?
B. 1.6 pips.
C. 0.16 pips.
A. 16 pips.
B. 1.6 pips.
C. 0.16 pips.
Correct Answer: A
In FOREX trading, a pip is the unit of measurement for the smallest change in the price of a currency or currency pair.
User Contributed Comments 3
| User | Comment |
|---|---|
| davcer | 1 pip = 1/10000 |
| davidt876 | don't listen to davcer. 1 pip = smallest possible change in the price given the number of decimal points Price quoted as 99.11/99.15 (BID/ASK) Difference = 4 pips Price quoted as 100.23/100.39 Difference = 16 pips It's not a percentage measurement or consistent accross prices. It completely depends on how the price is quoted. |
| jejemike | A pip is 1 percentage in points, which is 1%/100. this is equal to 1/10,000 since the difference is 0.0016=16/10000, it means 16 pips |