- 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 quote in the interbank USD/EUR spot market is 1.3231/1.3235. A dealer quotes a client a bid-offer of 1.3229/1.3238 for a spot USD/EUR transaction. Suppose a client pays the dealer's offer, the dealer should make a profit of ______ for every EUR transacted.
A. 0.0002.
B. 0.0003.
C. 0.0004.
Explanation: The dealer will buy a EUR from the interbank market at 1.3235 and sell it to the client at 1.3238, making a profit of 0.0003 for every EUR transacted.
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