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A Foreign Exchange Trader Quotes the Dollar Value of One

question 10

Essay

A foreign exchange trader quotes the dollar value of one euro as $/€ = 1.1510-1.1520.
These are direct bid-ask rates for a New York trader. What would be the implicit indirect
quotes for €/$?


Definitions:

Compounded Monthly

Interest calculated on a principal amount and then added to that principal sum at the end of each month, effectively increasing the base for future interest calculations.

Quarterly Contributions

Payments or deposits made into an account or investment fund every three months.

RRSP

A Registered Retirement Savings Plan, which is a retirement savings and investing plan for employees and the self-employed in Canada.

Compounded Semi-Annually

The process of applying interest to a principal sum twice a year, resulting in interest earning interest over time.

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