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John Moffat.
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Syed Ahsan Ali
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Can you please explain the difference between direct & indirect quotes. And in the exam are we tested on both quotes or just one?
Sir I have seen in your lecture that currency exchange rates are quoted as $/£ 1.2022 – 1.2028 [Foreign Currency $ FIRST then Local Currency £ in the LAST] – BUT is it always like this in the exam or it can be also given like this other way around £/$ 1.2022 – 1.2028. In this case both rate [1.2002 – 1.2028] is of £’s not $’s [true?]
Is this exchange rates that I mentioned above was direct or indirect quote?
John Moffat
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Exchange rates in the exam are given the way I explain in my lecture.
Direct exchange rates are when the price of I unit of the foreign currency is express in terms of the home currency. An indirect exchange rate is when 1 unit of the home currency is expressed in terms of the foreign currency.
Syed Ahsan Ali
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If UK £ is the Local Currency & US $ is the Foreign Currency then:
If exchange rates are quoted as £/$ 1.2022 – 1.2028 [then it is Direct quote]
If exchange rates are quoted as $/£ 1.2022 – 1.2028 [then it is Indirect quote]Is this correct what I wrote above about direct & indirect quotes?
John Moffat
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Correct (although obviously the figures would be different when quoted direct as opposed to when quoted indirect).
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