### CFA Practice Question

There are 341 practice questions for this study session.

### CFA Practice Question

Currency A is selling for \$0.61 and the buying rate for Currency B is \$0.19. The currency A : currency B cross rate is ______.

A. A:B = 0.31
B. A:B = 0.81

A:B = 0.61/0.19 = 3.21

User Comment
VenkatB from the dealer point of view..
A:\$ = unknown bid - 0.61\$/A
B:\$ = 0.19\$/B - unknown ask

The question asks us to find A:B = B/A = number f units of B needed to buy one unit of A

From the investor standpoint : We start with 1 unit of B, and sell it to dealer and get 0.19\$,
we then take that 0.19\$ and buy A (one unit of A sells for 0.61\$, so 1\$ will get us 1/.61 of A and 0.19\$ will get us .19/.61 of A = .311475 of A)

so with one unit of B we can buy .311475 units of A
To buy 1 unit of A, we need 1/.311475 units of B = 3.210526
____________________________________________

or
A:\$ = unknown bid - 0.61\$/A
B:\$ = 0.19\$/B - unknown ask

A:B = B/A = (\$/A) / (\$/B) = 0.61/0.19
BryonBUI I think this question doesn't involve a spread.
Simply: A:B=(A:\$)"divide"(B:\$)=0.61/0.19
Notation used as in CFAI text.
quanttrader it's a direct quote -- ie quote amt of fc in terms of dc
ankurwa10 I second ByronBUI's approach.

And Venkat, I believe the earlier reading mentioned that when S= A/B, implies the number of units of B needed to buy A. So it won't make sense, unless it is a direct quote. Which is the number of units of B needed to buy A would be expressed as B/A instead of A/B.
mtsimone .61/x * x/.19 = .61/.19 = 3.211. Use a form where the unknown cancels out.