CFA Practice Question

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CFA Practice Question

The bid-ask quote for Russian Ruble is $31.4762-31.4778. What is the spread?

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
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