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Answer: If the spot rate changes to EUR/USD $1.4416/$1.4424, then the EUR has weakened, and the USD has strengthened
- The quote is **bid/ask = 1.4296/1.4304**. - The **spread** is **0.0008 = 8 pips**, so **A is true**. - In the U.S. context, **EUR/USD** is a **direct quote** because it states the domestic currency price of one unit of foreign currency, so **B is true**. - You buy euros at the **ask** and sell euros at the **bid**, so **C is true**. - If the quote moves from **1.4296/1.4304** to **1.4416/1.4424**, the euro has **strengthened/appreciated** and the U.S. dollar has **weakened**, not the other way around. Therefore, **D is false** and is the correct EXCEPT choice.
Author: Manit Arora
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Question-191.1. The spot foreign currency exchange rate is EUR/USD $1.4296/$1.4304. Each of the following is true about this quote EXCEPT:
A
The spread is 8 pips
B
If the domestic currency is the US dollar (USD), from the perspective of an American trader, as EUR is the base currency and the USD is the quoted currency, this is a direct quote
C
We can buy one Euro for $1.4304 and sell one Euro for $1.4296
D
If the spot rate changes to EUR/USD $1.4416/$1.4424, then the EUR has weakened, and the USD has strengthened
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