- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Exchange Rate Calculations
- Subject 1. Cross-Rate Calculations
CFA Practice Question
If $:€ = 0.7928 and $:£ = 0.5311, then ______.
A. €:£ = 0.2617
B. £:€ = 0.6699
C. £:€ = 1.4928
Explanation: £:€ = (0.7928)/(0.5311) = 1.4928
User Contributed Comments 4
| User | Comment |
|---|---|
| plarda | Calculated EUR/GBP -> Read the answers ! |
| Lambo83 | I've seen this mistake a couple times on the currencies. The 1.4928 should be for EUR:GBP not GBP:EUR. A small change but makes a huge difference |
| editor | According to the required reading, quote: A direct currency quote takes the domestic country as the price currency and the foreign country as the base currency. For example, for a Paris-based trader, the domestic currency would be the euro (EUR) and a foreign currency would be the UK pound (GBP). For this Paris-based trader, a direct quote would be EUR/GBP. An exchange rate quote of EUR/GBP = 1.2225 means that 1 GBP costs 1.2225 EUR. In this case, for a U.S. investor, a direct quote is USD/JPY. Note JPY:USD is actually USD/JPY. This is also based on the textbook. Quote: Third, when both currencies are mentioned in the code or the name convention, the base currency is always mentioned first, the opposite order of the actual ratio (price currency/base currency). Thus, the code for "Sterling–yen" is "GBPJPY," but the actual number quoted is the number of yen per sterling (JPY/GBP). |
| birdperson | Price:base currency |