- CFA Exams
- CFA Exam: Level II 2021
- Study Session 4. Economics
- Reading 10. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 1. Foreign exchange spot markets

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**CFA Practice Question**

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

B. 1.6 pips.

C. 0.16 pips.

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.

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**User Contributed Comments**
3

User |
Comment |
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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 |