3 From the viewpoint of an American trader which of the foll

3. From the viewpoint of an American trader, which of the following would be an indirect quote in the foreign exchange market? a. SF2.40 b.$1.50/E £0.55/ d. $0.90/E e none of the above 4. From the viewpoint of a British investor, which of the following would be a direct quote in the foreign exchange market? a. SF2.40VE b. $1.50/ c. £0.55/E d. $0.90/E e. none of the above 5. Appreciation of a currency indicates that the currency has become a. more expensive b. less expensive c. unsure 6. From the viewpoint of an American Investor, which of the following would be a foreign exchange quotation in European terms? a. SF2.40/E b. $1.50/E c. £0.55/S d. $0.90 e. none of the above 7. From the viewpoint of a Japanese investor, which of the following would be a foreign exchange quotation in American terms? a. SF2.40/ b. $1.50/E c. £0.55/S d. 1.2 E/S e. none of the above

Solution

Question 3

Indirect quote is expressed as foreign currency per unit of home currency. Hence from the view point of an American trader, an indirect quote is expressed as foreign currency per unit of US Dollar. Correct option is c.GBP0.55/USD.

Question 4

Direct quote is expressed as  home currency per unit of foreign currency. Hence from the view point of an British investor, a direct quote is expressed as Pound sterling per unit of foreign currency  . Correct option is c.GBP0.55/Euro

Question 5

Appreciation of a currency indicates that we need to pay more for it tomorrow, that is it is getting more expensive.

Question 6

An exchange quotation which is Indirect quote in America is called european terms. Indirect quote is expressed as foreign currency per unit of home currency. Hence from the view point of an American investor, an indirect quote is expressed as foreign currency per unit of US Dollar. Correct option is c.GBP0.55/USD.

Question 7

An exchange quotation which is direct quote in America is called American terms. Direct quote is expressed as  home currency per unit of foreign currency. Correct option is b.USD1.50/GBP