A Student Researching the AUD/USD Exchange Rate on a Particular

question 78

Multiple Choice

A student researching the AUD/USD exchange rate on a particular day is confused to find the following two quotations:
i.AUD/USD 0.5825-30
ii.USD/AUD 1.7152-67
Which of the following statements is correct?

• A) Quote i is the convention adopted in Australia and is a direct quote
• B) Quote ii is the convention adopted in Australia and is a direct quote.
• C) Quote i is the convention adopted in Australia and is an indirect quote.
• D) Quote ii is the convention adopted in Australia and is an indirect quote.

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Definitions:

Dividend Discount Model

A method used to estimate the value of a company's stock by discounting predicted dividends to present value.

Constant-Growth

A valuation model assuming a steady rate of dividend growth for a stock.

Required Return

The minimum expected return investors demand for a particular investment, reflecting its risk level.

Common Shares

Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company’s profits via dividends.