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Hello everybody. I started studying for P4 without any lecturer – alone, and faced some questions I cannot resolve. I do not understand whether it is the mistake of the publisher or my lack of knowledge. Can anybody help me? I would be very grateful!
General question:
In many questions, mainly on international investment decisions theme, one of the datas given in the examples is current spot rate. I do not understand how it is calculated. See below:
When it is said “current spot rate EUR/GBP = 1.5”, I would understand that as for each EUR you receive 1.5 GBP (for example, you can go to yahoo and see that EUR/AUD = 1.3 that means that for 1 EUR you receive 1.3 AUD), however, in answer I see that EUR/GBP=1.5 actually meant GBP=1.5 EUR. THe question is therefore how should I do that in the exam? Do you think the examiner will read all my assumptions and accept the rate which was, for example, not expected by him? Or should I calculate that as in all these answers?I have some other questions, but I think I will ask them a little bit later
Thank you very much
EUR/GBP
what is this in words? it is EUR per GBP.. it means how many EUR are in GBP..do you know about Quotes? Direct Quote and Indirect Quote?
for example, I m in UK and rates are mentioned as GBP/ EUR. as GBP is local currency.. conversion rule will be Multiplication.
and when EUR/GBP is mentioned it is indirect quote, rule for conversiton will be division!so first you need to know what Quote of rate is in practice!
This is exactly what I mean! My question is only WHY in the answers it is vice versa? and what should I do on the exam?
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yuliai, you should follow what cuteleo110 mentioned.
how i remember is like this:
1.5 EUR/GBP should be
1.5 EUR per GBP.Hope this helps.
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