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Re: Money Market / Forward market

Vvipulv11y ago
Hi Sir, Hope your having a good evening. I am really struggling to understand whether to divide / times and which rates to pick from spot low or high, I been through books, text books your videos. Is there a specific way to remember this. I know its almost a day before exam but your help might get me a few easy marks, as I know how to do it but just not sure what to pick in what situation. Thanks in advance.
John MoffatJohn MoffatTutor11y ago#1
For example, if the quote is $/EUR 1.2 - 1.3 Then it means that many $'s (the first currency) equals 1 EUR (the second currency). So if you are converting $'s to Euros you divide. If you are converting euros to $'s then you multiply. The lower quote (1.2) is the rate to use if the company is buying the first currency ($'s). The higher quote (1.3) is the rate to use if the company is selling the first currency ($'s)
Vvipulv11y ago#2
Thanks. Does this differ if it is payment or receipt?
John MoffatJohn MoffatTutor11y ago#3
No - payment or receipt determines which whether you are converting $'s to Euros or Euros to $'s but the rule is always as above.
Vvipulv11y ago#4
Great thanks. You been very helpful to me :)
John MoffatJohn MoffatTutor11y ago#5
You are welcome :-)
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