A Foreign Exchange Dealer Using the Direct Form of Quotation

question 2

Multiple Choice

A foreign exchange dealer using the direct form of quotation quoted US$1.00 equals A$1.2897/1.4366. What does this represent?

• A) A buying rate of A$1.4366 for US$1.00.
• B) A buying rate of US$1.2897 for A$1.00.
• C) A selling rate of A$0.1.2897 for US$1.00.
• D) A bid-ask spread of A$0.1469.

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Definitions:

Goods Manufactured

Items that have been completed through the manufacturing process and are ready for sale.

Cost

The value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore.

Month

A unit of time, typically a portion of a year, based on the orbit of the moon around Earth, commonly comprising 28 to 31 days.

Raw Materials

The unprocessed natural materials or substances used in the initial stages of manufacturing to produce goods.