Forex Arithmetic
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the meaning of 'exchange rate' in forex transactions?
The exchange rate is the price at which one currency can be exchanged for another currency, expressed as units of one currency per unit of another.
What is the 'pip' in forex trading?
Smallest price movement in a currency pair, usually 0.0001
What is a 'direct quote' in foreign exchange?
A direct quote expresses the number of units of domestic currency required to buy one unit of foreign currency (e.g., INR 83.50 per USD 1).
What is meant by 'cable' in forex market terminology?
Cable refers to the GBP/USD currency pair
What is an 'indirect quote' in foreign exchange?
An indirect quote expresses the number of units of foreign currency that can be bought with one unit of domestic currency (e.g., USD 0.0120 per INR 1).
What is a 'currency pair' in the forex market?
Quotation of two currencies, base currency versus quote currency
What is the 'bid rate' in a forex quote?
The bid rate is the rate at which the market maker (bank) is willing to buy the base currency from the customer; it is the lower of the two quoted rates.
What is the 'base currency' in a forex quote?
First currency in the pair against which the other is quoted
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