- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 7. Capital Flows and the FX Market
- Subject 1. The Foreign Exchange Market
CFA Practice Question
The Swiss Franc is quoted in the New York as CHF:$ = 0.4312 - 0.4317. What is the ask price for $ in terms of a direct quote for a Swiss resident?
A. CHF:$ = 0.4317
B. $:CHF = 2.3191
C. $:CHF = 2.3164
Explanation: To move between direct and indirect bids and ask quotes expressed in terms of two currencies, the inverse of the bid provides the ask and inverse of the ask provides the bid. In this case, the ask for $ is in terms of CHF = 1/0.4312 = 2.3191. The lower of a pair of quotes is the bid price.
User Contributed Comments 4
| User | Comment |
|---|---|
| mrpman | direct quote is supposed to be home currency on top. ie .85$/CAD represents a direct quote for US investors. The quote is indirect so it has to be converted to direct first. |
| hunterh | does $:CHF mean XX dollars per 1 CHF? |
| MDrisc20 | hunter: yes, basically it costs 2.3191 CHF to purchase 1 dollar |
| nmech1984 | The USA follows indirect quoting, meaning that the same rate is direct for Switzerland. So why A is not true? |